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Abqaiq: Trust, but verify

September 18, 2019

Few topics are more market sensitive than the health of the Saudi oil industry since the attacks that took down half the Kingdom’s production on Saturday, September 14. Soothing news from Oil Minister Prince Abdulaziz bin Salman and Aramco officials helped calm the market on September 17. But given Riyadh’s stake in the matter can their statements be taken at face value? New data technologies that promote market transparency provide facts and context around their remarks.

Oil prices took their biggest jump ever when the market, which was closed for the weekend during the attacks, reopened on Monday, September 16, but retraced some of their gains after Prince Abdulaziz and Aramco CEO Amin Nasser issued a reassuring health report at a press conference in Jeddah on Tuesday. Half of the 5.7 MMb/d production shuttered by the attack was already back on line, the minister said, and the Kingdom’s production capacity was on track to rebound to 10 MMb/d by end-September and 12 MMb/d by end November. August production averaged 9.85 MMb/d. How do his remarks stack up against what can be observed on the ground?

Daily measurements of in-Kingdom crude oil inventories help not only gauge the scope of the supply disruption, but also give a sense of the Kingdom’s ability to keep exports going in the event of an extended shortfall. Using a new type of image processing, Kayrros measured a plunge of nearly 10 million barrels in Saudi crude holdings as of September 16 compared to pre-attack levels. Regular Kayrros coverage of global crude stocks spans 3.8 million barrels or ~95% of floating-roof capacity around the globe. To ensure the highest accuracy, a single-orbit technology is normally used to directly measure floating-roof tank storage volumes. We do not estimate volumes from mass balance or other methods involving third-party data, but leverage our unparalleled expertise in radar technology, which enables us to process images acquired at night and through cloud to deliver reliable and consistent weekly global data. Following the attacks on Abqaiq and Khurais, we have modified this approach to increase the frequency of updates by integrating data from additional satellite constellations. This innovative technique reveals the depth of the storage impact of the September 14 attacks, with steep draws led by the Yanbu, Juaymah and Muajjiz terminals.

Such a sudden plunge in inventories in turns reflects the scope of the production loss as of September 16: an estimated 3.4 MMb/d – somewhere between the initial 5.7 MMb/d disruption announced by Riyadh immediately after the attack and the 2.85 MMb/d indicated on September 17. This estimate reflects a combination of our multi-orbit stock-change measurement as of September 16, observed export levels, and assumed run rates at the Riyadh refinery. It is of course highly dynamic as production and exports continue to adjust and is subject to daily updates.

Assuming continued production at these rates, Riyadh can only maintain pre-attacks export levels for little more than two weeks. Such a short period would, at face value, be a fairly alarming figure for the market. Keeping exports going at normal rates, if that were possible, despite steep supply cuts would draw down inventories at a fast clip. In practice, things will be different. Stock declines will gradually abate as Aramco brings production back on line and/or maximizes output from other fields and at processing facilities to make up for the losses. Adjustments in export levels that have been reported for the short term as well as those of refinery runs both at home and in Bahrain will also mitigate the draws.

In addition to in-Kingdom stocks, Riyadh can also draw on prepositioned inventories around the world and divert supplies from operational stocks held at its joint-venture or fully-owned overseas refineries – which Kayrros monitors as well. As the world’s foremost crude oil exporter, Saudi Arabia holds large crude stocks not just inside but also outside the Kingdom, including facilities in Japan, Korea, China, the Netherlands, the US and Egypt, not to mention its large fleet of very large crude carriers (VLCC). Kayrros tracks these inventories, as well as those in producer countries whose crudes are potential substitutes for Saudi Arab Light and Arab Extra-Light, the two grades hit by the Abqaiq and Khurais outages.

Riyadh’s nominal stock cover, being a good indicator of the scope of disruption and current market tightening, is of course a moving target as production and export figures continue to adjust. Indeed, high-frequency measurements of Saudi crude stocks and export cover will help gauge the progress of the situation on the ground. Given the unparalleled scale of Saudi production and exports, seemingly small changes on the ground can translate into big supply swings and large price movements for the broader market. These changes cannot be tracked by relying on traditional means and third-party reporting. As the oil market navigates exceptionally stormy waters, new Kayrros data technologies can help validate official pronouncements when available, fill the gap whenever official announcements may be lacking, and cast a much-needed light on the momentous developments unfolding in the Middle East.

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The Impact of Abqaiq

September 16, 2019

Oil headlines can’t get any bigger than this. The September 14 attack on Saudi Arabia’s Abqaiq crude oil processing center, the world’s largest, and another unit at the giant Khurais oilfield knocked out 5.7 MMb/d of crude production, making it on paper the single largest oil supply disruption in history. But while the risk of further price increases are considerable, the real significance of the attack could also be much smaller than the headlines would suggest.

Oil prices jumped as markets reopened on Monday September 16 following the weekend attack, a predictable kneejerk response to a production cut of such magnitude. Yet the real impact of the attack will largely depend on the scope of the damage on the ground, which has yet to be ascertained. At least part of the production that was cut in the immediate aftermath of the attack could soon be restored. Depending on how much stays offline and for how long, the physical impact of the outage on the supply chain could prove more benign than feared. Conversely, a prolonged shutdown would be hugely disruptive to the global economy. Spare production capacity would be of little help since most of it is held in Saudi Arabia itself. The uncertainty band couldn’t be wider. Against this background, satellite imaging helps shed much needed light on both the situation on the ground and the broader market context in which it is unfolding.

However staggering the Saudi production loss – roughly 5% of the global market – may appear, satellite imagery suggests that the actual amount of impaired Saudi production capacity may be significantly smaller. Kayrros has been closely monitoring the facilities directly affected by the attack and all producing fields in Saudi Arabia. Since the attacks on Saturday, Kayrros observed damage at five units within Abqaiq’s facilities, impacting at least 2-3 MMb/d. Another eight units seem unscathed. The exact scope of the damage at the five units that were hit by the strikes remains to be assessed. In addition, Kayrros measured increased flaring intensity throughout the country’s producing fields.

As big as the wellhead disruption might be, its effect down the supply line could be relatively muted in the short term by Aramco’s ability to draw down its inventories to keep exports going. Kayrros measurements show in-Kingdom onshore stock levels were above average at the time of the attack. The Kingdom’s onshore crude oil storage currently sits at almost 73 MMb, or 3 MMb above average levels. In addition, Kayrros measures inventories at overseas tank farms around the world where Saudi Aramco owns or leases capacity and prepositions exports.

As with any disruption, the impact of the outage will also depend on the broader market context. Kayrros is picking up mixed signals here. While end-user demand for refined products appears to have slowed, raising concerns over a looming supply glut, Kayrros measurements show global crude oil stocks have plunged since June. This could compound the effect of a sustained disruption. The International Energy Agency (IEA) has been revising down its demand forecast for several months in a row and cautioned OPEC last week against the risk of a looming supply glut in 2020. But Kayrros monitored crude oil inventories – excluding floating Iranian stocks – have fallen precipitously since June, plunging by nearly 130 million barrels from a recent high of 2.65 billion barrels. While commercial stocks worldwide are far from depleted, they are not nearly as comfortable as just a few months ago. Inventory draws can help make up for a supply loss, but only up to a point.

Longer term, the attack on Abqaiq appears to undermine two major pillars of the global energy security architecture: the belief in the impregnability of Saudi energy facilities, and the united front of consumer nations in the face of supply disruptions. The Abqaiq complex is heavily protected from ground attacks, as are other critical Saudi oil facilities, and successfully repelled a brazen terrorist incursion back in 2006. Patriot missiles would have been expected to prevent air attacks. The fact that the latest assault wreaked as much damage as it did – whatever the ultimate scope of destruction might turn out to be – comes as a surprise and is a blow to the halo of Saudi impregnability that the market long took for granted. The slightly disjointed responses to the attack of the IEA and the Trump administration shows more cracks in the global energy security architecture. While the IEA said in a statement that the markets were “well supplied” and that it would take no action just yet, President Trump tweeted that he had unilaterally authorized a stock release from the Strategic Petroleum Reserve “if needed.” In the past, a coordinated, multilateral response among IEA members (and lately key non-IEA partners) would have seemed de rigueur.

Against this backdrop of mounting uncertainty, the ability to accurately assess the market in realtime is of critical importance. If anything, the latest attack clearly shows the changing nature of oil supply risk. Production facilities that long seemed invulnerable are proving more exposed than we took them to be. Multilateral organizations that were long the cornerstone of our global security architecture – energy or otherwise – are showing signs of stress. In the face of growing unpredictability, market participants have at least the benefit of unprecedented market transparency. Realtime knowledge of global stocks and their distribution clearly cannot predict disruptions, let alone prevent them, but can help mitigate their impact, identify arbitrage opportunities and hasten the reallocation of supplies as needed. While it is too early to predict the ultimate impact of the Abqaiq attack, the growing market transparency provided by unconventional data can go a long way to help assess it in realtime and mitigate its effects.

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Time is of the Essence

​August 21, 2019

Amid mounting market concerns about a slowdown in economic and oil-demand growth, it might come as a surprise that crude oil inventories have actually been plunging. Yet that is exactly what satellite imaging has been showing for two months now.

Since mid-June, Kayrros has measured a drop of more than 100 million barrels in global crude oil stocks, wiping out this year’s earlier builds. This decline has been as broad-based as it has been steep, has spanned all key regions, and while initially focused on crude-oil importing countries, it has now spread to producers.



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Amid demands for budget rigor, Permian operators drop frac crews but maintain output

​August 5, 2019

Frac crews in the Permian, the most prolific tight oil basin in the US, plunged by 19% in Q2 2019 year-on-year and 8% from Q1 2019 levels, Kayrros proprietary measurements reveal. In a world of uncertainty about the present and future of tight oil (commonly known as shale), these numbers speak volumes.

While figures about the rig count in shale basins have been available for years, hydraulic fracturing, which is much more closely linked with production volumes, had until recently remained a black box. However steep recent rig count declines may have been, the drop in the number of active horizontal fracturing crews, or ‘frac’ count, measured by Kayrros for the first time, is even more staggering.


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New Satellite Data Highlight Large Underreporting of Hydraulic Fracturing Activity

Houston, 23 July 2019

Kayrros, the leading data-driven analysis company serving the energy markets, disclosed today that hydraulic fracturing activity (fracking), the process for producing light tight oil, was underreported by more than 20% in the Permian, the most prolific US basin, in 2018.

Using optical and synthetic aperture radar imagery tracking together with proprietary algorithms to identify rigs and frac crews, Kayrros found that in 2018 alone, more than 1,100 wells were completed in the Permian basin but not reported through state commissions or FracFocus, a public repository for information on the chemicals used during fracking. The total figure of 6,394 completed wells counted by Kayrros for 2018 represents a 21% increase on the FracFocus estimate of 5,272 wells as of June 20, 2019.

US light tight oil (commonly referred to as “shale oil”) has been the world’s fastest growing source of oil supply in the last 10 years, turning the United States into the largest liquids producer and a major exporter of crude oil and refined products. Experts rely their analysis of the sector on data submitted by operators to state commissions and FracFocus.

Kayrros measurements reveal that public data fail to capture the full scale of fracking. The macroeconomic implications of this underreporting are far-reaching. For one thing, the backlog of drilled but uncompleted (DUC) wells is considerably smaller than thought. In any given month, Kayrros evaluates the Permian DUC inventory at just around 1,000 wells. Most of this rolling inventory results from regular drilling and completions operations. Over time, the number of wells drilled generally matches that of wells completed, leaving DUC inventories relatively unchanged.

The prevalent view that shale operators sit on a large backlog of DUCs that could be quickly brought to production in the event of an oil crisis even without further drilling is thus deeply misleading. There is just no such inventory.

The findings also transform the perception of light tight oil economics. In light of these measurements, the average well is both less productive and higher-cost than reflected in public data.

Commenting on the discovery, Andrew Gould, former Chairman of BG and Chairman CEO of Schlumberger and Kayrros advisory board chairman, said: “Misperceptions about shale oil in general and the Permian in particular have consequences, hence the importance of these measurements that show Permian production per well has been substantially overestimated. By the same token, average production costs per well are understated. With far more wells contributing to Permian and US oil production than accounted for, current shale oil production is substantially more water- and sand-intensive than is commonly believed.”

Kayrros Chief Analyst and Co-Founder Antoine Halff added: “For all its revolutionary impact on the oil industry, shale remains poorly understood. Publicly available data based on old-fashioned company reporting have their limits. Hard measurements unlocked by new data technologies show that contrary to public belief, there is no great buildup of DUCs just waiting to be brought online. The whole idea that the market can rely on this sort of de facto spare production capacity is an illusion. The industry is actually running on a much tighter leash than that.”

The findings have significant implications for the assumed efficiency of the Permian Basin. The analysis revealed that while oil production is accurately measured in monthly US statistics, it took many more wells to account for that production in 2018 than were reported. Assuming a cost of $5 million per horizontal completion, 2018 operator capex is also underestimated by as much as USD 4.1 billion. Further, the sand and water intensity of Permian tight oil production in 2018 was 23% greater than previously recorded with sand demand being underestimated by 9.2 billion pounds and water by 12.5 billion gallons.

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Have US E&Ps Become Victims of Their Own Success?

​July 15, 2019

The disconnect between US oil equity and commodity prices has been a feature of the industry since oil markets started healing from their 2014 crash.

It has come into renewed focus in the wake of the May 2019 crude rally, as the correlation between oil prices and E&P stocks broke down further. Kayrros oilfield activity data provide unique insights into what this might mean for both US E&P companies and US oil supply. US E&Ps, punished by investors for overspending, have consistently lagged oil price gains in recent years and once again have failed to benefit from the latest rally. Light tight oil operators have reacted by cutting costs, leading many to ask aloud if they are finally heeding investors’ calls to stay within cash flow and create value. Old-fashioned production models based on publicly-available data suggest that spending cuts will not only help companies’ bottom lines but might also stem US supply growth. Those models have been consistently proven wrong.

Tight oil producers have not only slashed their drilling expenditures but have sharply reduced hydraulic fracturing spending as well, Kayrros data reveal. The publicly-available onshore oil rig count has plunged by as much as 100 onshore YTD. Less visible to the market is the fact that active frac spreads have fallen as well. Kayrros has designed unique, proprietary algorithms that track the progress and activities of frac crews in realtime. It is currently tracking about 220 active completions crews across the largest US tight oil basins, 85 fewer than the year prior.

Despite the plunge in the rig count and active frac crews, Kayrros-monitored well completions have remained remarkably resilient. Data services and analysts using lagged and incomplete public records consistently underestimate output across basins and operators. That was notably the case in the second half of 2018, when Kayrros well completion measurements stood out from the rest of the industry in capturing a ramp-up in producers’ operations in quasi realtime. Once again Kayrros measurements show surprisingly robust completions in the US. While most data providers and analysts continue to read from the same decades-old playbook for divining production numbers, scraping public data and generating regressions, Kayrros directly monitors more than 80,000 permitted wells every month by fusing satellite imaging and other cutting-edge technologies. Kayrros takes images of every pad in the Permian, Eagle Ford, Bakken, DJ, Powder River Basin, and the SCOOP/STACK, determining how many wells are drilled and completed on each. These measurements are the only way a trader, analyst or even the CEO of an E&P company can catch a change in activity before official production figures are published three months later.

Kayrros measurements show that E&P operators are, in fact, doing more with less. Companies have managed to steeply reduce both their drilling times and their completions times. In the Permian Basin, operators and their service companies are drilling wells four days faster y/y and completing wells three days faster. This remarkable achievement in operating efficiency goes a long way towards explaining how companies have maintained high completion rates with fewer rigs and frac crews.

Has the industry become a victim of its own success? In maintaining a high completion rate and robust supply growth in the face of tepid oil prices and despite aggressive spending cuts, E&P companies are both helping their bottom line and, in a way, making things harder on themselves. Relentless US supply growth is putting downward pressure on oil prices, offsetting OPEC cuts, slowing down the market’s pace of recovery and limiting the scope of this recovery. One thing is clear: simply keeping track of the rig count, corporate spending plans or publicly available completions data will be of little help in assessing whether companies will turn cash flow positive or whether US supply growth will slow. The only way to understand in near realtime what is actually happening in US tight oil, whether at the basin or at the operator level, is to leverage the empirical well completion and oilfield activity data generated at Kayrros. Our well monitoring will be increasingly critical in the coming months to determine whether E&Ps are keeping their promises of belt-tightening – and how this might affect the broader oil market.

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Through a Glass Darkly - Why OPEC Cuts Appear to Have Fallen Flat

July 5, 2019

When macroeconomic concerns cloud the oil market outlook so darkly that even bullish OPEC news fails to stem a selloff as seemed to happen this week, can satellite imaging and machine learning still provide actionable signals or are the data they unlock drowned out by broader underlying worries?

On July 2, OPEC and its partners delivered a nine-month extension of their production cuts in what appeared to be a bold, price-supportive move but the news was upstaged by a slew of poor economic indicators and markets greeted it with a fall. Past production cuts have generally proved more effective at lifting prices when the market was already seen as having touched bottom than when it was in the earlier stages of a down cycle, when bullish signals act at best as mitigating factors. Even in a demand slowdown, however, accurate data do matter – by illuminating the broader context in which weak demand may be playing out, by helping market participants size up the downturn, or by giving advance warning of a looming inflection point.

While trade worries and gloomy indicators played a leading role in this week’s selloff, that’s not the whole story. Satellite measurements showing a large buildup in global crude inventories go a long way towards explaining why it was those indicators, rather than the OPEC cuts, that resonated most with the market. Kayrros measurements point to a steep overhang in global crude stocks compared to last year’s levels. The build makes it clear that OPEC cuts alone have not sufficed to offset expanding US production amid signs of a slowdown in demand growth during the last six months, and it is this combination that may be casting doubt on the impact of yet another round of cuts of the same magnitude.

Japan is a case in point. Few countries are more directly at risk from the OPEC cuts, Iran sanctions and any further escalation of tensions and armed confrontation in The Gulf than Japan, with its sky-high dependence on Gulf imports. And yet few seem to benefit from a higher stock cushion. Japan was very much in the spotlight this week as this is where Vladimir Putin broke the news of the OPEC cuts at the G20 summit and offered a preview of the producer group’s meeting before it even happened. Japan gets 60% of its crude imports from just Saudi Arabia and the UAE, and much of the rest from other OPEC and non-OPEC Gulf exporters. But Japan has greatly lowered its exposure to Iran since the previous round of sanctions in 2012-2015 by refraining from ramping up its imports back to preexisting levels when the sanctions ended in 2016. After drawing down its commercial crude stocks in late 2018-early 2019, Japan more recently rebuilt them with a vengeance, to the point that they now stand in demand cover terms at their highest point for the season since Kayrros began its tracking in 2016. It sure helps that Japanese oil demand has been in long-term, secular decline due to its ageing population, efficiency gains, and fuel substitution – a decline likely exacerbated by the current economic situation. In other Asian countries, the main outlets for oil from OPEC and The Gulf, crude stocks also look high. Chinese stocks, in particular, look to be more than ample.

Less visible to the market are the latest satellite measurements suggesting that global crude stocks may have peaked a couple of weeks before the OPEC meeting. If sustained, this could hint at a coming turnaround in market fundamentals under the full effect of Iran sanctions that could prove supportive of oil prices – albeit with a lag. The lifting of US sanctions waivers as of early May so far seems to have succeeded in cutting Iran’s exports to a trickle. Tankers loaded Iranian crude in May but Kayrros tracking shows many have yet to deliver. With part of the Iranian fleet thus tied up in floating storage near import terminals, notably offshore China, fewer vessels than usual were available to load last month at Iranian ports, slashing Iranian liftings to their lowest level since the Iran-Iraq war. Buyers such as Japan initially ramped up their imports ahead of time as a precaution, causing their domestic stocks to rise. Those imports have now worked their way into the system and the reduction in Iranian exports is now being fully felt through stock draws. In a partial reversal from earlier trends, Kayrros measured two consecutive weekly dips in global crude inventories in the second half of June. Lower crude imports have caused Japan’s crude inventories in particular to draw by an average 200,000 bpd in the last month, albeit from a high base.

Meanwhile, Kayrros machine learning algorithms, which have a strong track record of accurate demand forecasts up to nine months ahead, confirm a slowdown in global end-user demand for oil products, notably in Japan. Refinery demand for crude has also taken a hit, but lower refinery runs in some countries at least conceal a regional reallocation of refining activity as some oil importing economies appear to have offshored their Iran risk to China. Apparent crude oil demand was surprisingly weak recently in the US, Europe, and India but remained robust in China. Some countries, including Japan and South Korea, have recently reduced their domestic refinery runs and have been relying on higher product imports from China to meet domestic end-user demand, in effect offshoring part of their crude supply risk to China.

The heightened geopolitical risk described by political analysts as a hallmark of the present has its mirror image in the state of oil market. While demand pressures have recently taken center stage, price risks are not all on the downside. Once again, the latest (satellite) measurements suggest that the trajectory of stocks may well depend on Iran’s ability to sell its oil under sanctions as it did before the end of the waivers – clearly one of the wildcards facing the market. The demand outlook and the prospects for US light tight oil supply growth are other dimensions of the oil market where Kayrros measurements provide unique insights. China’s willingness to take in Iranian barrels under US sanctions remains uncertain and must be seen in the broader context of US-Chinese relations and trade negotiations. Should they get the greenlight from their Chinese buyers, several Iranian tankers that have been spotted offshore China apparently stand ready to unload on short notice. If not, Iranian production, which so far has remained remarkably resilient, would be at risk. Having been much more successful in skirting US sanctions from November to April than it is usually given credit for, Iran is now facing a tougher challenge. A sustained decline in Iranian supply to the market could not only prove geopolitically volatile by bringing Iran’s economic crisis to a boil, but would also dramatically sharpen OPEC’s punch and affect oil markets in a big way by offsetting demand concerns.

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Building 3D digital twins of the Earth’s infrastructure from orbit

​July 3, 2019

Recent breakthroughs in mathematics make the impossible possible

Imagine being able to take a 3D digital stereoscopic image of anything on the Earth’s surface from orbit, and then rendering a model that could be used to cover anything from electrical powerlines to the Notre Dame fire. This vision is now reality. Kayrros is unleashing a new innovation in 3D mapping that combines high-resolution image processing and a whole lot of cutting-edge math to create a digital twin of any piece of the world’s infrastructure from a constellation of orbiting sun-synchronous satellites. After acquiring two satellite images pointed at the same spot on Earth, Kayrros applies a unique computational algorithm to transform those images into a 3D digital model, generating a digital topographical snapshot in near realtime. This unrivaled technology, made possible by advanced innovations in mathematics, holds the potential to monitor virtually any resource, structure, or asset as a 3D model, from coal stockpiles to emergency disasters, and agricultural development to digital models of the Empire State Building.

Rome wasn’t built in one day. Neither was 3D mapping from space. Years ago, Kayrros in-house satellite experts had the idea of reconstructing the Earth from the sky, and are now the global leaders in the field with expertise such as a PhD on the subject from France’s Ecole Normale Supérieure and 1st place in a US intelligence competition on 3D reconstruction. Backed by a team of global experts at France’s CMLA, France’s leading Research Center for Applied Maths, the project was driven by innovation and propelled by the necessary resources to push it forward. Its roots are grounded in advanced mathematics and computation algorithms, which form the foundations of Kayrros itself.

Though satellite images are taken thousands of miles away from the Earth and processed through complex computational algorithms, the basic concept of 3D reconstruction connects to a much closer lens — the human eye, best illustrated through a concept that many might recall from teenage-era science class: parallax. Combining two slightly different optical viewpoints of the same object allows us to perceive a level of depth. This is what our brains do, thanks to the images of our two eyes. If an object is farther away from the lens, it will appear to move less; when closer, it will appear to move more. Computer vision scientists have turned this concept into algorithms, with multiple cameras acting as ‘multiple eyes.’ Kayrros in-house data scientists calculate the exact distances between the satellite lens and surface of the Earth to construct topographical models of the surface, calculating varying levels of depth with enough precision to draw a picture.

Kayrros sources its images from a unique constellation of optical satellites operated by Planet, the leading commercial satellite company that images the Earth every day to bring actionable global change, that fly in several sun-synchronous orbits around the earth in about 100 minutes. In the case of 3D reconstruction, two factors are particularly important: timing and angle. The agility of these satellites allows them to quickly turn their cameras up to 30 degrees away from the vertical, allowing for two images to be taken of the same object from two different angles — in a span of 10–30 seconds. This generates two pictures from the same place, with one seen from the left and the other from the right.

The innovation presents a new way of seeing what’s all around us on the Earth’s surface. Digital twins of entire cities, complex infrastructures, and integrated engineering systems can be rendered in a span of hours. This is strengthened by newfound access to high-resolution commercial satellite imagery; previous developments in 3D mapping have been drone-focused. Where drones can generate complications — namely the need for human operators, a potentially slowing factor — satellite imagery steps in to fill the gaps.

The new generation of 3D mapping not only has the capacity to monitor events as they happen, but can track assets in a time series and may even prevent disastrous events through an algorithmic alert system. Kayrros bespoke mapping has the capacity to provide automatic monitoring of large areas with machine-learning, using low-resolution images to identify risk areas and generating notifications on change, eliminating reliance on reports for asset volumes that are often lagged or inaccurate — for companies themselves and other assets across the global industrial board.

The technology is also applicable to realtime events, such as natural disaster response. Should a city be hit by a natural disaster, digital modeling flags collapsed infrastructure to give emergency response teams a birds-eye-view of the ground to spot evacuation routes and catch pockets where people are in distress. The modeling can then be used to evaluate damage on the environment over time, with the original model serving as a detailed reference for pre-damaged topography and infrastructure.

3D Mapping will change the scope of Earth Observation, providing a new vantage point from which to digitally monitor what’s around us. And this is just the start.

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For OPEC, Rising US Crude Exports Have a Silver Lining

​June 28, 2019

As OPEC meets on July 1, continued growth in US production may paradoxically no longer be the threat it once was for the producer group.

Until recently, US light tight oil, commonly referred to as shale oil, had been a major challenge – even arguably an existential threat – for OPEC. Far from going away, shale’s relentless growth shows no sign of abating, as Kayrros realtime monitoring of well completions reveals. On its face, this could keep frustrating the group’s efforts to curb supply. But as US production keeps rising, the way shale interacts with the broader oil market is changing. Shale is no longer simply displacing oil imports into the US, it is now directly or indirectly competing with OPEC barrels on international markets. While this could be an added concern for OPEC, it also makes WTI, the main US benchmark, more exposed to international developments, including OPEC policies.

Recent price movements seem to signal the coming of age of WTI as an international benchmark. This would be good news for OPEC. Reversing earlier declines, oil prices have started firming up on geopolitical risk in the Gulf—and none have firmed up more than those of US WTI, a marker whose prices in the past had often seemed disconnected from international markets and more driven by domestic factors than global ones. (US coastal benchmark LLS did not track, but LLS was less disconnected from Brent to begin with.) Oil prices across the board spiked after an attack on tankers in the Gulf in mid-June, retraced their gains, then rose again a week later following Iran’s downing of a US drone and stayed there. Most Middle East oil flows to Asia and to a lesser extent Europe, and is thus priced off Brent and Dubai benchmarks rather than WTI. Yet Kayrros analysis shows WTI proved more responsive to the events than Brent. Brent-WTI spreads tightened and backwardation in WTI futures widened but narrowed in Brent.

The internationalization of WTI makes sense given the trend in US exports. The combination of US supply growth and sanctions policy has effectively turned the US into a world supplier to be reckoned with. Production growth increasingly pushes US shale oil into export markets, while new logistical links extend its reach by connecting shale basins with coastal export terminals. US sanctions aimed at Iran and Venezuela have also helped by effectively making room in international markets for US barrels. US crude exports surged by 800 kb/d since January 2019, even as those from Iran and Venezuela combined have dropped by upwards of 1 MMb/d. US sanctions are also starting to have more bite. Kayrros satellite monitoring shows that Iran and Venezuela in recent months were surprisingly good at circumventing sanctions and managed to ship more oil abroad than they are generally given credit for. Since the end of sanction waivers in May, however, Iran seems to be having a harder time keeping oil revenue going. While Iranian tanker loadings have continued unabated in the last two months, how effective Tehran will be at finding a home for these cargoes remains to be seen. Several Iranian oil customers have switched part of their crude slate to US oil or said they would do so.

Even as its production and exports continue to grow, however, the US is not about to replace Saudi Arabia as swing supplier – also good news for OPEC. While supply growth from the US effectively competes – despite obvious differences in crude quality – with OPEC barrels, the US has no spare production capacity. Shale oil is short-cycle and has relatively low initial capital requirements, making it potentially more price elastic than conventional barrels, let alone so-called unconventional oil with long lead times and high capex. There is a limit to this price sensitivity, though. Kayrros measurements of well completions in the Permian and other shale plays debunk the widely shared but erroneous view that shale producers sit on large inventories of drilled and uncompleted wells that are just waiting to be brought online. Saudi Arabia and its allies remain the sole holders of effective spare production capacity, giving them unparalleled leverage over supply and prices.

While there is no lack of challenges ahead for OPEC, continued US production growth may no longer be at the top of the list. US exports are finally accomplishing what OPEC had long set out to do but could not deliver on its own: bring down US crude stocks. Reversing earlier builds, the US EIA last week reported an eye-popping, 12.8-million-barrel plunge in US crude stocks in a single week, including – as correctly measured by Kayrros five days ahead – a 1.7-million-barrel draw at Cushing, Oklahoma. Shale’s growing access to international markets means that US oil stocks are more likely to draw in response to OPEC supply cuts or demand for precautionary storage elsewhere than they have in the past. To be sure, OPEC has other headaches, not least a demand slowdown after five years of record growth. But as US oil extends its international reach, WTI price signals are bound to more closely reflect global fundamentals, including changes in OPEC supply, than had previously been the case. Shifting interactions between the US and global markets will also make it ever more critical for market participants to keep close tabs on developments in both shale basins and international markets – both areas where Kayrros technologies bring exceptional realtime insights.

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Planet Signs Deal With European Energy Analytics Startup Kayrros

​June 25, 2019

Today, Planet announced a commercial agreement to provide European energy analytics startup Kayrros with access to subscription-based Earth observation imagery and data.

Through this agreement, Kayrros will use Planet’s data to provide facility monitoring for energy traders in order to bring more transparency to their markets. The company will also utilize Planet’s tools to become a reliable provider of bespoke 3D mapping via satellite. This mapping will provide a dimensional snapshot and an evolution of commodity volumes or structural changes, allowing clients to monitor physical assets and measure volumes with unprecedented accuracy and speed.

Planet’s satellites have the ability to take targeted images of specified areas with a high revisit rate and produce high-resolution imagery that can allow for better accuracy in 3D image reconstruction.

Kayrros leverages cutting-edge technologies, particularly satellite imagery and artificial intelligence, to provide an innovative technological platform for asset observation. Kayrros solutions are rapidly scalable and continually expanded to new geographies, industries and sources of data to help provide greater transparency into otherwise opaque markets.

“At Kayrros, we have brought together the biggest group of satellite imagery specialists in Europe and have been able to provide clients in the energy sector with an unprecedented level of insight and accuracy, unthinkable even a few years ago,” said Antoine Rostand, founder and CEO of Kayrros. “This partnership with Planet and their Stereo SkySat imagery allows us to build on that, particularly in the exciting area of 3D mapping.”

“We are excited to be working with Kayrros to bring their unique insights to the energy sector using Planet’s Stereo SkySat imagery,” says Matthew Wood, Planet’s director of European sales. “Their unrivaled combination of domain knowledge, market and technical expertise is a perfect complement to Planet’s daily imagery.”

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Old Middle East Tensions Flare Up Amid New Market Transparency

​June 21, 2019

Further escalation of geopolitical tensions in the Middle East is raising oil-market concerns over supply risks, even as US sanctions appear to have already slashed Iranian crude loadings since early May. Despite the upward pressure on prices, however, Kayrros data show the market remains well supplied.

Reports of an Iranian shooting of a US drone in the Gulf and of an aborted US retaliatory attack boosted oil prices on June 20-21. Meanwhile on the product front, an explosion at a Philadelphia refinery on June 21 raised concerns about US East Coast gasoline supplies, at a time when US gasoline consumption seasonally rises ahead of the July 4 holiday.

The Gulf’s long-standing role as the world’s leading crude exporter and one of its busiest chokepoints explains the market’s high sensitivity to such regional flareups. For the first time, however, data from satellite imaging provide realtime, measurable contextual information that was utterly missing during past episodes of Middle East tensions. In the past, market analysts relied on supply, demand and inventory data that were both partial and severely lagged when attempting to assess the impact of potential disruptions. Today’s flareup is occurring against a backdrop of unprecedented transparency.

On the surface, the context of the latest Middle East tensions is one of slowing crude inventory builds. After three consecutive weekly builds, Kayrros measurements show global crude inventory movement came to a near halt in the week ended June 16, as draws in Europe and Latin America offset Asian gains. This shift comes on the heels of seemingly reduced Iranian crude loadings since Washington’s decision to let sanction waivers expire in early May.

This stabilization occurs at an elevated base, however, with global inventories at their highest level in roughly two years. And overt tanker loadings are far from a reliable indication of actual Iranian crude exports. Although absolute crude stocks are about flat week-on-week, on an annual basis the overhang has widened to more than 125 million barrels. As in recent months, a drop in overt tanker loadings in Iran appears to hide an offsetting spike in loadings by tankers that have turned off their transponders. While most of these cargoes have yet to land, large volumes of Iranian oil thus appear tied up in transit and could cause renewed builds later this month.

Meanwhile, the very countries that stand to be most directly affected by a drop in Iranian exports or a potential disruption in the Middle East continue to stockpile. Most Gulf exports go to Asia, where crude stocks are up by nearly 80 million barrels year-on-year and have led to the global build. In general, oil-consuming countries at the receiving end of Iranian exports have exhibited contrasting patterns since the end of the waivers. Unlike in Asia, stocks in Europe are down by 20 million barrels year-on-year. Those in Japan and South Korea have been rising lately, even though both countries have cut off their imports from Iran. Indian stocks buck the Asian trend, due in part to a recent reduction in imports from Venezuela.

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As geopolitical risk flares in the Arab Gulf, satellite monitoring reveals persistent glut

​June 14, 2019

Mixed signals in the run-up to the OPEC meeting: geopolitical risk and backdrop of mounting demand risk Against this confusing backdrop, market data gathered from satellite monitoring and other new data technologies offer some critical insights.

A June 13 attack on tankers offshore Oman, the details of which remain somewhat murky, reminded the market that the Middle East Gulf remains a geopolitical flashpoint. On the other hand, the broader backdrop for these mounting geopolitical risks is one of growing demand worries and weakening oil prices, despite continued OPEC/non-OPEC production cuts.

In the last few weeks, steeply rising inventories have provided evidence of rapidly deteriorating market conditions. Builds span all key regions, both in consuming economies and in exporting countries. In total, inventories rose by approximately 40 MMb in May and are now more than 90 MMb above 2018 levels. Today, stocks in OPEC exceed the November 2018 highs just before OPEC’s decision to cut production beginning in January 2019.

Builds in exporting countries are a direct result of drastic export reductions in recent weeks, notably from Kuwait and UAE. These countries mostly export to Asia. Venezuela exports fell as India reduced its purchases, resulting in domestic builds. In contrast, Saudi production only edged down in May, but from relatively low levels as the Kingdom had assumed the bulk of the groups cuts since January.

Iran exports also fell after US sanctions waivers ended in May, though not nearly as steeply as indicated by reported cargoes. Since the US imposed sanctions in November, a large proportion of Iranian exports have turned off AIS transponders at loading ports. Each month, Kayrros models the path of these stealth cargoes with an uncertainly interval based on the likelihood of erratic ship signals. Even in a maximum case scenario of Iranian exports, the picture of OPEC exports is one of steep cuts. At the low end of Iranian exports range, aggregate cuts are even steeper.

These export cuts from OPEC make the inventory builds in consuming countries all the more remarkable. Despite reduced imports, consumers have been stockpiling whether by design or accident. US, Europe and Asia inventories have been building counter-seasonally in recent weeks. Inventories in the US have risen almost 10 MMb in the last month and are roughly 40 MMb above June 2018 levels. In mid-May, Chinese inventories reached a new peak not seen since May 2016, the beginning of Kayrros data. European inventories have begun to build since mid-May and reverse draws due to the contaminated Druzhba pipeline.

These paradoxical stock builds highlight the role of two key market drivers: the persistent strength of non-OPEC growth, led by US light tight oil, and signs of weakening refiner and end user demand. US production growth validates Kayrros completions data. At the same time, end user consumption shows signs of weakening. IEA, in its monthly OMR released May 14, cut the 2019 demand forecast for the second consecutive month. There are also growing concerns about the economic impact of the US-China trade war. Meanwhile, refinery demand for crude oil has been weak: high maintenance in the US and Europe, unseasonably low runs, and possibly shifted refinery maintenance come together to coincide with coming IMO standards.

Yet price signals also suggest that strong US production growth and weak demand growth are not the end of the story. At least some stock building may be precautionary. The Brent futures curve, still in backwardation, is inconsistent with a severe weakening of economic activity and is not the kind normally associated with stockpiling. At the same time, Brent-LLS spreads remain near export break-evens. This suggests that some stockpiling maybe taking place as a hedge against rising geopolitical risks, especially in China.

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Satellite imagery and machine-learning algorithms change the game of LNG plant monitoring

June 12, 2019

Revolutionary tech gives players a market edge

In an industry that lacks a thorough network of public intelligence, satellite imaging generates realtime data on liquefied natural gas (LNG) plant disruptions before they hit the market. Publicly-released data on LNG operations are scarce, rendering key realtime indicators—liquefaction utilization rates, train on/off rates and train outages—a blind spot.

Though companies may report periods of maintenance or technical disruptions, it’s nearly impossible to measure the precise periods of inactivity from start to finish. However, the impact of operations on the ground are later realized in shifting trade flows, import/export levels and spot prices. New techniques, like using satellite imaging to spot on-the-ground warning signs that may impact the market, are changing traditional LNG monitorization by providing the elements of a prognosis—such as maintenance schedules and outages—before their effects are reflected in the market.

Qatar is a big player in the LNG market boasting a large range of plants, but does not frequently release its data on maintenance periods and plant outages publicly. On-the-ground disruptions that may impact the market often go unreported. Furthermore, its maintenance program still has a big impact on the global market, since outages have a substantial impact on the country’s export levels. However, when a disruption on the ground occurs, it takes days for the process from maintenance to exports to reflect in the market. In April, Kayrros—a Paris-based technology firm—detected outages of multiple trains in Qatar in realtime, generating actionable data on the spot. One of these outages, picked up on Rasgas’ Train 3 on March 31 wasn’t reported in the news until over one week later.

Kayrros is leveraging alternative technologies to answer questions on LNG by processing satellite imagery—taken from satellites in multiple constellations—with machine-learning algorithms, sifting through high quantities of satellite imagery to track LNG on-the-ground operations. By combining these two technologies, the company can catch key LNG liquefaction indicators—like thermal anomalies and flaring signals—to monitor the status of LNG plants, including activity levels and outage alerts. Though, what’s been trending is not only the on-ground monitorization, but how certain events ripple through the market. Knowing them before they take effect is a new possibility promoted by the tech boom.

Leveraging the data revolution can soften the blow of abrupt market impacts. China recently slapped additional tariffs on US LNG imports, raising the tax from 10% to 25%. Since the US-China trade war started to take effect in July 2018, imports of US LNG to China started to decline, decreasing throughout 2018 with only two US LNG ships unloading in China in 2019. However, Kayrros satellite monitoring reveals that US liquefaction utilization rates—a key indicator of production—were on the rise throughout the decline, signaling that the US did not slow down production despite dwindling trade relations with China. Compiling this with import/export data reveals that China was quick to find new importers of LNG, taking shipments primarily from Australia with additional high numbers from Qatar and Malaysia.

For traders, this new technology is generating a huge buzz. Outages, maintenance and restarts often have an immediate impact on traders’ physical supply chains of gas, causing the need to look for a replacement cargo. Additionally, disruptions have an immediate impact on the short-term supply and demand balances of physical LNG, which add or remove cargoes from the market. Activity levels affect LNG financial prices (JKM) as a consequence, and give traders the opportunity to express that information as a trade before word gets out.

Technology is presenting new opportunities respond to old problems in the LNG industry. As LNG continues to develop, the role of natural gas in power generation, transportation and petrochemicals is becoming more prominent, opening the door for new technologies to revolutionize monitorization as the demand for it continues to grow.

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Swings in Indonesia’s Crude Demand Highlight Impact of Second-Tier Markets

June 9, 2019

With oil-market attention focused on the top consumers, smaller but more opaque players can sometimes disproportionately move the market. Recent revisions to the International Energy Agency’s oil demand growth forecast for 2019 are a case in point.

In its May 15 Oil Market Report, the IEA trimmed its estimate of oil demand growth for 2018 by 70 kb/d to 1.2 MMb/d and slashed its 2019 growth forecast by a further 90 kb/d, to 1.3 MMb/d. The agency pinned the bearish move which helped depress oil market sentiment on unexpectedly low 2018 data for a diverse group of countries including Egypt, India, Indonesia and Nigeria – all large emerging markets with relatively low per-capita oil demand and poor data transparency.

New technologies including remote sensing and satellite monitoring help shed light on these opaque but dynamic second-tier oil markets and alleviate the lack of visibility from publicly available data. Indonesia, the world’s fourth most populous nation behind China, India and the US, is a particularly telling example. Non-OECD Asia as a whole accounts for more than a quarter of global oil demand and is the world’s fastest-growing oil consumer. While China and India, respectively the world’s second and third largest oil markets after the US, dominate the region, the rest of emerging Asia, led by Indonesia, makes up nearly 10% of world demand. Oil-market visibility there is so low that Indonesia, which has been moving in and out of OPEC in recent years, sometimes doesn’t seem to be sure itself if it is an oil importer or exporter.

In a bid to reduce its growing dependence on foreign oil, Indonesia, whose demand has surged by 25% in 10 years, adopted policies in September to boost domestic refining and crude production. Its crude imports have since trended lower. Imports sank to a multi-year low in April. Despite something of a rebound in May, their general trajectory since September has been down. While shipments from Saudi Arabia and Nigeria have held relatively steady, those from Mexico, Sudan, Angola, Algeria and Gabon have fallen. Most of the cut has come from a diverse group of exporters that have collectively made up roughly half of Indonesian imports in the last two years.

Even as crude imports trended lower, domestic supply surged to a 19-month high in January, but Kayrros monitoring shows that the recovery has proved tenuous. Indonesian crude output started a secular decline in the early 1990s, turning the country into a net importer in 2004. Production bounced back year-on-year in 2016 for the first time since 2008 but then resumed its downhill slope, hitting a low in July 2017. Since then, supply has been edging marginally upward, but is having a hard time holding on to its gains. January’s gain was thus promptly reversed and production fell back in May to its lowest level in about a year.

Although it might be tempting to see falling crude imports as a sign of success in rekindling production growth, tanker and inventory monitoring shows the drop was offset by a mix of higher product imports and crude stock draws. So far in 2019, Indonesia appears to have traded a reduction in crude import dependency for a steep increase in product imports. Meanwhile, the country drew down its crude inventories in May on both a monthly and an annual basis, bringing inventories to their lowest level for the month in four years.

While Jakarta aims to double refining capacity to 2 MMb/d by 2025, plans to expand the Cilacap refinery on Java island have been put on hold. Depending on the country’s oil supply strategy, recent crude draws could either reflect a new structural reality or lead to a swing back upward. Official policy notwithstanding, Indonesia for now appears to be increasingly reliant on its Asian neighbors at the expense of domestic refining activity for product supply. This is not unlike the pattern seen in Japan, where rising product imports from China have offset a decline in refinery throughputs at home. Should the trend continue, recent crude stock draws could reflect the new reality of reduced refinery demand – a pattern that could be exacerbated by a cyclical downturn in end-user product demand. Should it prove temporary, however, refiners would soon need to soon rebuild their stocks, leading to a resurgence of crude imports. Either way, satellite monitoring will help shed light on the direction of a dynamic but all too opaque market and keep track with it in near realtime.

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April US Well Completions Unfazed by Spending Restraints

​May 31, 2019

Well-publicized Wall Street demands that light tight oil producers rein in their spending have fueled expectations that supply growth would soon slow down. Kayrros’s near-realtime measurements of well completions in the Lower 48 show these concerns to be inflated, and that budget discipline does not necessarily come at the cost of production growth.

Given tight oil’s preeminent role as the main engine of oil supply growth in recent years, one could have expected a shift in tight oil investment patterns to impact the global oil market in a big way, tightening supply/demand balances and lifting oil prices. And because the tight oil industry runs on a fast cycle compared to the rest of the oil sector, the effects of such belt-tightening could be quickly felt. Kayrros’ realtime monitoring puts these concerns to rest – at least for now. There is no real sign of a slowdown in tight oil development just yet. After a dip in Q4 2018, well completions bounced back in Q1 2019 and have since stayed relatively high. Tighter spending plans for tight oil E&P companies have yet to translate into lower completion activity and slower supply growth.

Unlike the rig count, well completions are a reliable leading indicator of tight oil supply, but for long recent activity could only be estimated based on badly lagged and incomplete data. No longer. Kayrros now provides quasi realtime measurements of well completions with near perfect accuracy. Publicly-available data offer little transparency on how investor demands are carried out in practice. The rig count is an imperfect measure of field activity that does not correlate well with production. Well completions correlate much better, but until recently all available data on well completions were lagged and inaccurate. Kayrros has developed proprietary algorithms that track completions in near realtime with near perfect accuracy, providing unprecedented transparency on field activity at the basin, county, well and corporate levels. In Q1 2019, Kayrros tracked over 20,000 well sites across all key tight oil basins in the Lower 48 to provide intelligence on 119 publicly traded E&Ps. Kayrros achieved an overall accuracy of 98% in completion measurements compared to completions reported by E&Ps to the SEC. Kayrros also tracks private companies that do not report to the SEC, thus providing a full picture of field activity. These measurements are a highly reliable leading indicator of production.

Kayrros measurements show that after rebounding in Q1 2019 from Q4 2018 lows, well completions in aggregate fell back a bit in April month-on-month but remained the second highest since September. A dip in well completions in late 2018 likely had more to do with the the budget cycle than with capital discipline or an exclusive focus on free cash flow at the expense of production growth. Completions bounced back with a vengeance in Q1 2019, reaching their highest level in March since August. Aggregate completions levels slid in April from March yet remained well above Q4 2018 levels. While E&Ps have generally kept their spending plans for 2019 on a tight leash, companies appear to be getting more for their buck and have managed to maintain a high level of field activity, which in turn looks set to result in robust supply growth.

The overall dip in April completions hides differences at the Basin level. Activity in the Permian, Eagle Ford, and Anadarko basins declined month-on-month but accelerated in the Williston and DJ basins. In the Permian, the light tight oil powerhouse of the Lower 48, completions fell back after reaching record highs in March. Publicly traded companies led the trend with a 15% drop month-on-month, while completions by private operators slid by 9%. The drop was focused in the Delaware Basin, with Midland completions showing more resilience. Among public companies, Parsley Energy bucked the trend with a standout month in the Midland, completing the most wells since September. Completions in the Eagle Ford also fell, leading one to wonder whether a March spike was an aberration. In contrast, those in the Bakken continued to ramp up seasonally as we move towards summer.

While efficiency gains appear to be supporting robust fracing and well-completion activity, the growing role of the majors in a Permian basin once entirely dominated by small independents also looks set to support continued production growth. None there has a higher profile than Exxon. In the last year, and Q1 2019 in particular, Exxon has taken quite the lead among its peers. Completing, on average, 1 horizontal well per day in 2019 puts the company on the same pace as leading independents like EOG and Pioneer in the Permian and far ahead of Chevron and Shell. Exxon is also the most geographically diverse of the Majors operating in the Permian. Just in the last three months, the company has completed wells in over 10 counties on both sides of the Permian basin. In contrast, BP has been slow to begin working on the Delaware assets it acquired from BHP Billiton last year, completing only 12 wells in the last three months.

Robust well completions set aside the US from other producers and are driving a wedge between the price of its benchmark WTI and those of Brent and Dubai. But the past is no guarantee of future performance — hence the need for continuous monitoring. A reduction in drilling activity could in turn limit the number of wells to complete. While light tight oil producers keep a rolling inventory of drilled and uncompleted wells (DUCs) for operational reasons, Kayrros measurements show this inventory is smaller than generally believed. A thinner DUC cushion means a drop in drilling would be quick to trickle through to fracing activity.

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Taking the Pulse of Venezuela’s Production

​May 24, 2019

In trying to assess how the US embargo on Venezuelan oil imports has affected that country’s oil output, observers generally assume that its production has followed oil exports on their downward path. Satellite imaging shows the story is more complicated.

The question matters greatly both to the global oil market, to which Venezuela is a leading supplier of heavy, sour crude, and for the embattled government in Caracas, whose survival depends on the oil industry. But Venezuelan oil production remains as opaque as it is closely watched. It suffered gravely from self-inflicted wounds under the late President Hugo Chavez and his successor, Nicolas Maduro. The US embargo declared in late January was meant to hasten the regime’s collapse by cutting off what was left of its economic lifeline, in support of self-declared Acting President Juan Guaido. While it has taken a toll on exports, satellite detection shows the trend has been uneven and its effect on production more lagged and so far, less steep than generally thought.

While US sanctions have given the country’s oil industry a severe blow, Kayrros monitoring shows Caracas has managed to keep production rolling to an extent. The plunge in exports gained momentum in April, but inventory builds during the same period show crude output has yet to follow suit. After Washington cut off exports to the US, Venezuela first managed to find alternate market outlets, notably in India. Exports declined from January’s peak levels in late February and March but remained on par with the 2018 average. Indeed, production struggled to keep up with exports during that time, resulting in domestic inventory draws. More recently, India cut its purchases, causing the slide in Venezuelan crude exports abruptly to change gears. As outflows plunged by 425 kb/d month on month, domestic crude inventories bounced back steeply. Whereas many production models reckon that Venezuelan crude supply plunged by 50% in April, in line with exports, Kayrros’ mass balance approach combining export data and inventory measurements shows production edged down by only 11%. While that leaves production at the lowest level since the general strike of 2002 and the following purge of national oil company PdVSA, most estimates significantly overstate the scope of the decline.

Not only are export estimates an imperfect and often misleading guide of underlying field production, but they too can be flawed. Of the total reported crude oil exports, 120 kb/d of exports never actually left Venezuela in April, adding instead to rising volumes in floating storage. Conventional export data report these barrels as en route to their destinations but satellite monitoring shows otherwise. Net exports from Venezuela are now at half the peak levels reached in January.

On the other hand, a plunge in Venezuela’s imports of diluents and light crudes, needed to ship its heavy crude by pipeline, poses a significant supply threat. This gradual tapering off of imports could eventually choke off what is left of the country’s crude production capacity. In April, Venezuela’s oil imports fell below 50 kb/d, from an average of 135 kb/d in 2018.

Reports of a plunge in Venezuelan supply add to bullish market sentiment driven by US sanctions and Iran and the contamination of the Druzhba pipeline from Russia to Europe, but overstate the supply loss and fail to account for the buildup in Venezuelan stocks, a potentially bearish factor. While Venezuelan production has fallen, it has not collapsed as steeply as some would have it. A recent plunge in exports has yet to lead to a production fall. Conversely, with stocks rising, a drop in production might not necessarily reduce exports further, as those can be drawn in part from storage. Should stocks start bumping against storage capacity limits, however, that would force Venezuela to start adjusting production accordingly.

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Bringing Greater Transparency to LNG Production

May 17, 2019

In a growing industry without a developed network of market intelligence, satellite imagery detects warning signals on LNG supply disruptions before they occur.

LNG market players commonly operate with minimal publicly-released figures from liquefaction plants, rendering key realtime indicators—liquefaction utilization rates, train on/off rates and train outages—unknown.

However, satellite imagery is pulling back the curtain on plant operations. Plant outages and restarts are often preceded by high flaring—burning off excess gasses. These heat anomalies are detected by satellite and combined with on/off signals at plant trains to give a full picture on plant liquefaction utilization rates, train on/off rates and outages. The impacts of these indicators are felt in shifting trade flows, import and export volumes and LNG spot market prices. Though China’s recent decision to raise LNG tariffs on US imports sent media outlets buzzing, monitoring realtime ground operations reveal that the market already accounted for this shift—months ago. The warning signs not only provide realtime intel on operations but provide key supply signals before they hit the market.

Catching the warning signs straight from the plant in this way gives key indications for predicting changes in export levels much earlier. Most LNG plants do not announce train outages, which represent key indicators in forecasting export levels and subsequent supplies. Kayrros LNG monitoring alerts clients of liquefaction facility shutdowns, allowing market players to take key decisions before news of any outages breaks.

For example, at the Gorgon LNG facility in Western Australia, on/off ratios on the facility’s three trains reveal key patterns of their efficiency, identifying the trains that are more susceptible to outages and the frequency at which they go offline. Using this data sheds light on the facility’s export patterns, and enables the trends that will ripple through the market to be seen much earlier. Indeed, it is the nature of the LNG industry that a ripple in Australia has the potential to seen across the global supply chain.

In the case of US-China trade war escalation where China slapped additional tariffs on US LNG imports, Kayrros satellite monitoring reveals that global liquefaction utilization rates have seen little fluctuation and US installed liquefaction capacity has been on the rise. Nevertheless, more granular plant monitoring data revealed that US liquefaction rates began to see periodic dips in utilization in the spring.

Since the US-China trade war started to take effect in July 2018, imports of US LNG to China started to decline leading to only two US LNG ships unloading in China in 2019 versus 25 in 2018. Compiling this with import and export data reveals that China was quick to find new importers of LNG, taking shipments primarily from Australia with additional high shipments from Qatar and Malaysia.

Liquefaction rates and, by extension the impact on supply and exports, can also give directional indicators about LNG spot market prices. Kayrros monitoring has revealed that in the past few months, global liquefaction rates have linked to NE Asia spot prices. The liquefaction rates, measuring the capacity at which LNG facilities are operating, signal the looming export and supply levels that drive prices, although the impact from any facility to the regional market price is not immediate. Having greater visibility on liquefaction facilities allows market players to calculate the likely impact in realtime. The key is having the data and knowing the warning signs.

The US-China trade war and Beijing’s retaliatory tariffs shine a spotlight on the rising role of natural gas, specifically LNG, in the global energy supply chain. As the LNG market keeps growing in volume and sophistication, the value of advance detection of supply, flow and price events will only increase. Natural gas is being embraced as a clean fuel that is increasingly competing with oil and coal not only in sedentary uses like power generation, but even in road and marine transportation, among others.

Compared to long-term pipeline deals, LNG offers flexibility and optionality, even as the spread of floating storage and regasification units (FSRUs) opens up brand new markets for it around the world. On the flipside, LNG also comes with a dose of unpredictability. Like refineries, LNG plants are prone to disruptions, thus providing arbitrage opportunities. Satellite imaging combined with machine learning not only provides realtime visibility on this heady and increasingly competitive market but even has demonstrated predictive power. Just as LNG is transforming energy markets, so too are advanced data analytics transforming energy trading by bringing market transparency to the next level.

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Changes in Mood, Swings in Price

May 10, 2019

Oil markets have been on a rollercoaster, with concerns over Iranian and Venezuelan crude exports together with other flashpoints leading recent price gains. Yet Kayrros data suggest that the risks are not all to the upside, and that a number of decidedly bearish factors may soon reassert themselves.

Brent prices surged by $18/b so far in 2019, supported by a wide array of worries, from the outage of Libya’s largest field in January and February to the embargo on Venezuelan oil exports to the US in late February and the political standoff in Caracas, the abrupt end of Iran sanctions waivers in May, Riyadh’s mixed signals about its willingness to make up for lost Iranian barrels, glitches with Russia’s Druzhba crude pipeline, and most recently Washington’s sabre rattling in the Persian Gulf. But while problems with current and future supply are piling up, you wouldn’t know it from current fundamentals, which point to a well-supplied, if not oversupplied, market. The recent rally, Kayrros analyses show, is clearly driven by market sentiment. And as is usually the case in a sentiment-driven price regime, the risks of a correction run high.

Kayrros data showing a $10/barrel disconnect between price gains and fundamentals do not necessarily suggest that market participants have been overestimating supply risks. They do, however, suggest that the market’s shock absorption capacity might not be fully priced in. Sentiment-driven price regimes are all about risk perception, and about the anticipation of a looming shift from current trends. By definition, current measurements do not reflect such future events, but they can tell us a lot about their potential market impact: a supply disruption will have a bigger price impact in a tight market. While most market participants only have a time-lagged, partial view of current oil inventories, Kayrros near-realtime measurements show global crude stocks have been building at a fast clip throughout the recent rally, with gains spanning all key consuming regions—APAC, China, Europe and the US— in 2019. From an inventory standpoint, the market is thus much more well-supplied than it appears: the Kayrros Global Inventory Tracker shows stock levels at record highs in several regions with Chinese inventory levels being particularly robust. Overall, global inventories have diverged from prices since mid-March. Deseasonalized inventory data show inventories are at levels similar to the end of 2017 and early 2019 when crude prices were $10/b lower than today. This leaves consumers in a more comfortable position to withstand a supply disruption than is reflected in publicly available data.

While the stock cushion is greater than it might appear, Kayrros data show that supply resilience in the face of geopolitical turmoil has also defied expectations. In particular, recent history shows the market should not underestimate Tehran’s ability to circumvent sanctions. Recent stock builds have occurred despite a wide array of negative supply news, from disruptions in a strife-afflicted Libya to sanctions against Iran and Venezuela. Despite price gains, news surrounding supply shortages have not been corroborated by inventories. Libyan production rebounded with a vengeance from the outage of the Sharara field in January and February, recently reaching its highest levels since 2013. After suffering severe declines in recent years, Venezuelan production and exports have stabilized somewhat, and Caracas has so far been surprisingly successful in getting around the US embargo and keeping oil shipments moving to far-flung markets as Kayrros tracking shows. And while the Iranian economy has suffered greatly under US sanctions, Kayrros monitoring also reveals that Tehran has managed to maintain a much greater level of exports than commonly thought, often off the radar. How Tehran will fare under the tightened US sanctions starting this month is anybody’s guess, but experience shows the market should not write it off entirely. For all the talk of supply disruptions, Kayrros data show the global level of “lost barrels” has actually fallen in recent weeks, helping in part to explain the stock builds.

Last but not least, Permian supply growth, despite reports of greater focus on budget discipline and free cash flow at the expense of production gains, shows no sign of abating just yet. After dipping seasonally in late 2018, the pace of well completions measured by Kayrros in the Permian snapped back in March to near August highs. Kayrros will release April estimates early next week.

While the market has focused on bullish supply risks, there is no shortage of downside risks as well. The recent escalation of the US-China trade war is already putting renewed downward pressure on prices. This could increase as the evidence of rising inventories trickles through the market. Equity markets have already greeted the US move to slap new tariffs on China, and Beijing’s threat to retaliate in kind, with a sharp selloff. The latest exchange of punitive measures between China and the US shows that while Washington has emerged as a top political risk factor in oil markets, this risk plays on both the upside and the downside. Even as supply risks to the oil market may be overestimated by market participants in the face of ample production and rising inventories, downside risks to demand may also have been underappreciated.

Many commentators have noted the proliferation of supply risks in today’s oil market. Evidence of a growing disconnect between prices and fundamentals and of a rising risk premium in oil prices underscores this reality. But this disconnect also highlights the potential for a sharp correction. Kayrros near-realtime inventory and production data suggest that the market has entered a sentiment-driven pricing regime. While supply risks are undeniable, they are also highly uncertain, and the market appears in many ways to be more resilient and to have built a stronger safety cushion in the form of inventories than reflected in time-lagged and incomplete public data. Recent history shows that sentiment-driven price rallies can lead to sharp, punitive corrections. We may have entered such a pattern.

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Oxy Ups the Ante

​May 3, 2019

The Permian saga that started with Chevron’s eyebrow-raising bid for Anadarko last month took a surprise turn when days later a smaller firm, Occidental Petroleum, countered with an even higher offer. Kayrros’ unique insight into the three players’ Permian operations goes a long way towards understanding the value proposition of the deals.

After two bids in two weeks, Anadarko’s stock price jumped by $12 per share. Besides offering $11 per share more than Chevron, Oxy’s bid is half cash compared to Chevron’s 25%. Either combination would create a Permian behemoth. But while commentators have focused on the face value of the deals and the financial firepower of the two bidders, the question of their operational alignment with Anadarko may be even more decisive.

Based on drilling and completion times, Anadarko would stand to benefit from Oxy’s operational excellence. Kayrros data show Oxy to be, on that count, the Permian’s most efficient company. Oxy’s average drilling and completion times came in at just under 30 days in 2018, making it one of the fastest operators in the basin. Oxy left wells drilled but uncompleted around 15 days on average—the shortest DUC time of all major operators. By comparison, Anadarko drilled wells in a similar time frame, but took twice as long to complete. A merger would likely focus on improving Anadarko’s completion times. Oxy’s stellar drilling and completion performance, combined with the high concentration of Anadarko leases in core Permian areas, has the potential to compound the production results. In a Chevron acquisition, it is Anadarko that would provide its acquirer with efficiency gains.

From the standpoint of lateral lengths, Oxy also stands out, compounding the effect of its completion efficiency. With lateral lengths of more than 10,000 ft, Oxy boasts the second longest horizontal sections in the Permian Basin, ahead of even Chevron, which had the third-longest median laterals. In contrast, Anadarko’s lateral lengths averaged just 7,500 ft, one of the lowest averages among Permian operators. For Oxy, acquiring Anadarko would mean not only adding the latter’s production volume to its own, but also greatly improving the productivity of the combined company by applying its distinctive completion efficiency and longer laterals across a consolidated prime acreage.

Oxy and Chevron both differ from Anadarko in their use of oilfield service providers for well completions. Whichever offer Anadarko may decide to accept, its choice could have ripple effects in the OFS industry as the winner looks to streamline and optimize operations. Kayrros data show Oxy and Chevron each prefer a single OFS company for their completions. Almost 80% of all Oxy completions were performed by Schlumberger last year, while the lion’s share of Chevron completions were performed by Keane Group. To quicken completion times, Anadarko’s purchaser may cut back on the number of its service providers, compared with its current strategy of using multiple companies.

While the acquisition is heavily focused on the Permian, both Chevron and Oxy have proposed total purchases of Anadarko, including natural gas projects and overseas operations. In that sense, each is set up differently for a full acquisition. As a major international company, Chevron operates in 84 countries and the proposed purchase of Anadarko would make up a much smaller fraction of its overall value relative to Oxy’s proposal. Furthermore, Chevron’s ability to weather an oil-price slump would not be greatly hindered by its purchase of Anadarko. Oxy on the other hand would have to take on a lot of debt to buy Anadarko and would end up with more price exposure. In what some have seen as a hostile takeover, Oxy seems to be pinning its future to Anadarko and the Permian Basin. Is it worth the risk?

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Special report: Occidental chases Anadarko

April 29, 2019

$38 Bn bid bests Chevron’s offer to create Permian behemoth with global scale

> Oxy has sparked a bidding war over Anadarko, making a competing offer nearly two weeks after Chevron

> Operationally, Oxy is more efficient in the Permian than Chevron, minimizing drilling, completion, and DUC time

> Schlumberger or Keane Group likely to gain significant market share depending on victorious bidder

Horizontal wells completed in 2018 in the Permian Basin
Horizontal wells completed in 2018 in the Permian Basin

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Iran Exports: Will They or Won’t They Fall to Zero?

April 26, 2019

The US goal, announced April 22, of bringing Iranian oil exports to a screeching halt as soon as next month raises oil market uncertainty to a new level. Given the many open questions about how Washington plans to implement this policy on such short notice, the best way to gauge its potentially dramatic market impact may be through realtime satellite monitoring.

The US Administration surprised many market participants on Easter Monday by declining to extend Iran sanctions waivers (technically known as Significant Reduction Exemptions, or SREs) past their May 2 expiry. If fully implemented, the move would remove anywhere from 1 million to 1.9 million b/d of Iranian oil exports from the oil market virtually overnight. But while Washington ostensibly leaves no room for exceptions, full compliance on such short notice seems unlikely. Indeed, several tankers were already on their way to deliver Iranian crude to Asia by the time Washington made its announcement. Under US sanctions law, the Administration may elect to grant short-term waivers of up to 120 days to importers of Iranian oil to give them time to find alternative sources of supply. Some importers of Iranian oil could also choose to defy the US and even double down on their purchases. And Iran may opt to turn off the transponders on its tankers and go off-the-radar, as it has done repeatedly since the re-imposition of oil sanctions in early November.

As much as 40% of Iran’s oil exports were conducted off the radar in the last five months, Kayrros monitoring reveals. The impact of Washington’s zero-export policy will depend not only on the readiness of China, India, and Turkey to comply with the new target, but also on whether Washington will manage to weed out stealth exports or only cause them to increase. Kayrros data show that between November 2018 and March 2019 roughly 620 kb/d of Iranian exports were flagged as off the radar, though the exact proportions varied depending on the month. Kayrros uses satellite imaging to track Iranian oil production, inventories, and exports on a monthly basis. Off-the-radar shipments are detected through a combination of satellite monitoring of oil tankers and crude oil mass balance assessments.

While on-the-radar shipments of Iranian crude edged lower in April ahead of the sanctions’ expiry, crude production has remained steady so far and oilfield disruptions have been minimal since mid-February, Kayrros satellite monitoring reveals. After sanctions first came into effect in November, field disruptions in Iran became more frequent, though only averaged 50 kb/d between November and January. Field activity and inventory changes suggest that production and export volumes were both generally higher than reported in the last few months.

Another factor that will determine the potential market impact of SRE removal is the availability of alternative sources of supply. While key OPEC producers have enough spare capacity to ramp up production and make up for Iranian disruption in due course, the immediate supply to the market must be met through producer inventories – which can only be tracked via satellite in a timely manner. Both the US EIA and the International Energy Agency recently noted that the market enjoyed enough spare capacity to handle a halt in Iranian exports, but producers cannot turn this on instantly. Producer stocks typically act as a buffer to throttle back or ramp up supply before field production itself can be adjusted. Since the latest round of OPEC production cuts took effect in January, OPEC inventories have been fluctuating somewhat. Kayrros data show that after initial builds in the early stage of the cuts when exports were trimmed faster than production, key OPEC members have been drawing down stocks as actual cuts to production took hold and exports had to be partly drawn from inventories. Nevertheless, OPEC inventories are currently above average… This should ease worries about a total supply choke.

Finally, in the event of a shortfall, consumer stocks are the supply of last resort. Inventory levels in importing countries determine their resilience to any potential supply disruption. In this regard, each of the eight SRE beneficiaries is a different case. China and Turkey have been building their crude inventories during the last six months and have kept them above average levels. In Japan and South Korea, a late rush to import from Iran resulted in small builds in the few weeks before the US announcement. By contrast, Spain and Italy used the sanction waiver period to wean themselves off Iranian crude and did not exhibit any signs of stock piling.

While supply and demand fundamentals will help drive the oil price response to the US policy of zero Iranian oil exports, Washington’s confrontational posture and the prospect of further escalation in US-Iranian relations also send the market an unmistakably bullish signal. Washington’s goal of strictly enforcing Iranian oil sanctions follows its designation of the Iranian Revolutionary Guard Corps as a foreign terrorist organization in early April. Iran has threatened to retaliate to the latest move by blocking the Strait of Hormuz. Meanwhile China has formally protested Washington’s April 22 announcement and warned that its decision would “contribute to volatility in the Middle East and in the international energy market.” As geopolitical tensions heat up, keeping track of facts on the ground will be more important than ever.

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King of the Permian

April 18, 2019

Chevron’s $50 billion acquisition of Anadarko, announced last week, does not only mark the birth of a new “ultramajor” as widely noted, but also, based on Kayrros data, the crowning of a new King of the Permian, one of the world’s most prolific basins.

The deal, which puts Chevron in the same league as Exxon in terms of overall crude production, opens a new chapter in shale oil and Permian history. Following earlier deals by Exxon and BP, it caps a string of large Permian acquisitions by international oil majors, accelerating the consolidation of the shale industry. Proprietary Kayrros data show that Chevron together with Anadarko completed more wells in the Permian than any other company, making the combined entity the basin’s uncontested leader in terms of completion activity, ahead of both Pioneer and EOG.

The consolidation of the two companies’ prized Permian acreage, which has been the focus of media coverage so far, is a major benefit of the deal, but only part of the story. For the acquisition brings together two very different operators with contrasting performance and operational profiles. Using satellite imaging and machine-learning algorithms, Kayrros tracks well completion activity across the major US tight oil basins and collects extensive data sets including near-realtime information on well coordinates, completion dates, lateral lengths, operators, and service contractors. These paint a vivid picture of the sector’s participants and show sharp differences between Chevron and Anadarko’s performance in the Permian. With the purchase of Anadarko, Chevron not only expands its Permian acreage but also acquires valuable expertise and skillsets.

Based on last year’s record, Chevron displayed relatively slow completion times but boasted the third-longest median lateral lengths in the Permian. Bringing its checkerboard of leases together with those of Anadarko may allow it to push lateral lengths even further. In 2018, Chevron only completed wells towards the edges of the Delaware in Reeves and Eddy Counties but holds large tracks of checkerboard acreage on the Texas side of the Delaware. This is precisely where Anadarko’s acreage is concentrated. By taking over the independent, the major may be in a position to further extend lateral lengths across contiguous leases.

Chevron’s takeover of Anadarko may also allow to speed up the pace of its completions. In 2018, the two companies had different strengths in performance that could complement each other, Kayrros data reveal. Following drilling, Chevron left its wells drilled but uncompleted (DUC) for an average of two months, one of the longest delays among its neighboring operators in the Permian. Chevron, however, completes its wells with a much quicker turnaround time. On the flip side, Anadarko’s DUC time is short in comparison to Chevron’s, but it takes longer to bring the wells on line. The acquisition therefore offers the potential for Chevron and Anadarko to play off each other’s strengths to boost overall efficiency. Wells in the Anardarko plays could benefit from Chevron’s ability to complete wells faster, while Chevron could benefit from Anadarko’s ability to reduce its drilling to completion times.

Beyond the Permian, the deal also positions Chevron well within the DJ and Powder River Basins. Though its level of activity trailed off in Q4, Anadarko drilled more than any other operator in the Colorado and Wyoming basins. Though leaving many DUCs, Anadarko has laid the groundwork of production in the region, paving the way for Chevron to step in and ramp up production fast.

Vendors to the combined company may be in for a bit of a shake-up. Kayrros analysis shows diverging patterns between Chevron and Anadarko’s approaches to choosing service companies. Chevron has so far shown a large preference for one service company. In contrast, Anadarko has been less reliant on any one company, spreading its completions work between four providers. A looming question is whether Chevron will seek to apply its own model to Anadarko’s operations or take a page from the latter’s playbook and widen its spread.

Even as Permian independents are coming under pressure from investors to refocus on free cash flow at the expense of production growth, the majors are taking up the slack. Chevron’s purchase of Anadarko accelerates the majors’ inroads into shale oil. These acquisitions will likely prove as transformative for the shale patch as for the buyers. Takeaway infrastructure constraints notwithstanding, the “ultramajors” may turbocharge shale production growth. As integrated companies with large Gulf Coast refineries, these new Shale Kings may also aim to better capture the shale value chain through vertical integration of their Permian production and downstream assets. ExxonMobil already announced a major expansion of its big Beaumont, Texas plant that will be specifically geared to shale throughputs. Chevron could be next at its giant Pascagoula, Mississippi refinery. Further downstream investments to process growing shale supply domestically and extract maximum value from it could be the next headline.

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March on Tripoli: Oil in the Crossfire

April 12, 2019

Just as things were looking up for Libyan crude production, the country is once again on the brink. Libya’s National Oil Corporation (NOC) lifted force majeure on Libyan exports after the country’s largest field, the 315 kb/d El Sharara, returned from a protracted outage last month. The field’s restart led to a swift export recovery. March loadings at coastal terminals surpassed the 1 MMb/d mark, exceeding pre-shutdown levels.

By mid-month, Kayrros reckons outflows from the Zawiya terminal that serves El Sharara were back to normal and matched inflows from the field. Since then, however, a surprise move on the capital Tripoli by General Khalifa Haftar, head of the Libyan National Army (LNA) that controlled the country’s eastern region and that had recently taken control of El Sharara, has caused renewed uncertainty. NOC Chairman Mustafa Sanalla on April 12 called the attack the biggest threat facing the country’s oil and gas exports since the civil war that toppled strongman Muammar Gaddafi in 2011.

Although a relatively small producer, Libya has a disproportionate impact on the oil market due to the volatility of its production and its closeness to Mediterranean refining centers. Keeping track of its oil sector helps manage the risk. Since 2011, internal strife has caused Libya’s light sweet crude oil production to swing up and down within a band of 500 kb/d or more as oil facilities became collateral damage in the fighting between militias and tribal groups. This rollercoaster has often had an almost immediate effect on oil markets. Brent prices spiked to $70 per barrel as Haftar took the market by surprise with his march on Tripoli earlier this month. But while Libya’s fractious politics cloud its outlook, satellite imaging brings to its oil sector a high degree of transparency. Kayrros monitors production at the country’s oilfields and storage levels and tanker loadings at their export terminals in quasi realtime. This transparency certainly doesn’t make up for the opacity and complexity of the political makeup but can help market participants get better visibility on its oil-supply impact.

If successful, Haftar’s move on Tripoli would put all of Libya’s oil and gas production under unified control for the first time since 2011, but his ability to hold on to power and keep oil exports going in defiance of the UN is unclear. The LNA, which enjoys the support of several regional powers, is vying for control of the capital with the UN-backed Government of National Accord (GNA) of Prime Minister Fayez al-Sarraj. It also faces opposition from other factions, including militias in the coastal town of Misrata that were instrumental in the overthrow of Gaddafi. Should Haftar, who with his capture of Sharara already controls an estimated 85% of the country’s oil infrastructure, succeed in taking over the capital, many analysts reckon that his staying power, and in particular his ability to find buyers for the oil despite the lack of international support from western powers, would be doubtful.

Control of Zawiya will be key in the battle for Tripoli. Against the backdrop of an unstable military and political situation, activities at the terminal may be one of the most reliable clues available to oil-market participants to gauge the conflict’s oil market impact. Zawiya is Libya’s largest export terminal and the key connecting point from El Sharara to buyers across the Mediterranean, as well as one of the last-remaining oil strongholds that Haftar has yet to capture. Nestled in the northeastern tip of the country near the Tunisian border and 50 km from Tripoli, it is connected to vast pipelines running almost 1000 km south to Libya’s biggest-producing fields. It is in many ways the beating heart of the western region’s oil sector. Monitoring Zawiya flows can be compared to taking the EKG of a large chunk of Libyan oil supply. At last check, Zawiya’s heartbeat had fully recovered from the Sharara outage, with healthy inflows, outflows and inventory levels. Time will tell if that remains the case.

Unplanned production swings in Libya have already complicated OPEC’s task of managing the oil market since the Vienna accords of 2016. Heightened uncertainty about the country’s outlook will make the group’s work even more challenging. Unplanned outages and production restarts have been a wildcard that has alternatively offset and exacerbated the impact of OPEC production cuts. The group is due to reassess its production targets at its next meeting in June. Mounting uncertainty about Iranian production levels and Washington’s willingness to extend sanctions waivers to importers of Iranian oil, Venezuelan crude exports in the face of US sanctions and a domestic meltdown, and now Libyan supply against the backdrop of heightened domestic strife could move up that schedule.

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As China’s Economy Cools Down, its Crude Demand Heats Up

5 April, 2019

Few countries have done more to turbo-charge oil demand growth in the last 20 years than China. So the idea that a long anticipated slowdown in Chinese economic growth is finally underway would seem bearish for the oil market. New data suggest otherwise.

After years of speculation about a Chinese soft or hard landing, signs that the world’s second largest economy is shifting gears are piling on. But while China might be slowing down economically, Chinese crude stocks, crude oil imports and refinery throughputs show no hint of it.

New oil market data made possible by satellite imaging and other technologies give the pulse of China’s economy in quasi realtime. Far from confirming China’s economic slowdown, these indicators have remained surprisingly strong. Kayrros measures inventory levels in 2086 floating-roof tanks at Chinese storage terminals, accounting for the vast majority of the nation’s crude storage capacity. Stock levels have rapidly risen, recently defying seasonal trends, thanks to record-high crude imports. Kayrros measurements of implied crude demand, derived from stock changes and supply measurements, have remained exceptionally robust despite signs of economic slowdown. Growth exceeded 11% in late 2018 and has since remained surprisingly buoyant. Lagged data from China’s National Bureau of Statistics confirm a strong uptick in refining and petrochemical activity.

While China’s growing appetite for crude might indicate Beijing’s success in shoring up its economy, the latest data also underscore the changing nature of the linkage between China’s economy and oil demand. The oil intensity of emerging markets normally peaks during their economic takeoff and gradually slows as they mature. China seems to be defying this model. While its economy is clearly maturing, with consumer demand and the service sector increasingly taking over from export-oriented industries to lead growth, its oil intensity shows few signs of decreasing, and in some ways appears on the rise.

China’s refining sector is moving counter-cyclically to the rest of the economy: initially built to meet domestic requirements, it has become increasingly export-oriented, underscoring China’s rise as an important product hub and regional merchant refiner. Chinese oil demand from export-oriented industries has been slowing down, while mobility demand and car ownership from the burgeoning middle class has been on the rise, even if car sales have recently slowed. But oil processing has risen in importance as an export-oriented industrial sector in its own right – first seemingly by accident, as refining capacity grew faster than demand, and more recently apparently by design. Chinese oil refining has also been increasingly integrated downstream, with rising petrochemical and plastics production.

In terms of its impact on global balances, China’s growing refining activity has its flipside: a reduction in throughputs in its regional product export markets, notably Japan. Even as China’s throughputs have been growing, Japan’s have been decreasing. Japan and other Asian countries have become increasingly reliant on China for a fast-growing share of their refined product needs.

Similarly, whereas crude oil stockholding patterns in China and the region had long moved in sync, they have recently been diverging. Japan’s stockholding requirements appear to have fallen in line with its refinery throughputs. Kayrros tracks crude oil stocks in Japan, Korea, Singapore and other regional markets. Japanese and Chinese crude stockholding patterns have recently become a mirror image of each other.

Japan’s falling crude throughputs may make it easier for it to comply with US demands for a reduction in its imports of Iranian oil. China’s growing appetite for crude may on the other hand make it harder for it to cut back, though it has recently built a huge crude oil stock cushion. The US government is due to decide next month whether to extend new sanctions waivers to importers of Iranian oil. Japan, Korea and China have been among the eight waiver recipients in the last six months and have been historically among the leading importers of Iranian oil.

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Kayrros well completion data show US production December drop to be short-lived

29 March, 2019

Reports of a January dip in US Lower 48 crude production will be comforting to OPEC in its bid to tighten the oil market, but Kayrros’ latest US Well Completions Report, drawing on the firm’s unique insights into tight oilfield activity, shows it will likely be temporary.

As expected, the US EIA on March 29 reported US Lower 48 supply fell by 90 kb/d in January, its first monthly decline since January 2018. This drop, which tracks past seasonal behavior, follows a plunge in well completions measured by Kayrros in December via a combination of satellite imaging and advanced processing. But the same proprietary technologies show well completions bounced back in January and February, presaging a rebound in production.

As Saudi Arabia leads OPEC’s drive to draw down stocks and lift oil prices, the rate at which US production increases will be a key factor in its success, or lack thereof. But for all the scrutiny they have attracted, tight oil producers have consistently defied expectations, both on the downside and, more often, the upside. Hundreds of independent public and private companies operating in the multiple plays make for a complex and highly variable production outlook. In the tight oil patch, unlike in other fields, the rig count is not a reliable indicator of production trends because of the tendency for producers to build up well inventories for the purpose of completing increasingly large groups of wells simultaneously or to capture the economic benefit of an oil market often in contango.

With tight oil, changes in production follow well completions far more closely than drilling activity, but completion activity had long been elusive. Kayrros now tracks well completions and service company operations at the basin, state, county, company and well levels. These new data shed unprecedented light on US tight oil operations and provide unique insights into US production developments in near realtime. In the case of US tight oil basins, where operations can change by the hour, current and granular data is key in spotting market trends and production indicators.

Activity across the Permian, in particular, suggests that 2019 could push US production levels higher than the market expects. Kayrros data show operators across the five largest US tight oil basins maintained steady activity levels in February after bouncing back in January from a late 2018 decline, with the Permian leading the increase in completions.

Completions activity in January and February was far from consistent across plays, however. Despite the overall rise in the rate of well completions across the US shale patch, Kayrros data sees the Anadarko and Williston Basins lagged behind the nationwide strong performance. While the Anadarko’s stacked SCOOP play was originally pitched by operators as the next Permian, production numbers are not measuring up. The basin’s relatively high ratio of private operators helps cloud the picture, but Kayrros sheds light on the region’s operators’ activity regardless of whether they are publicly or privately owned, independent of their reporting and disclosure requirements.

Not all declines are the same, Kayrros data show. Completions activity in the Anadarko Basin continued on a steady decline in February, but the slowing pace was skewed by just four companies. The granularity of Kayrros data provides context and helps put headline figures in perspective. In the Anadarko Basin, the overall decline in activity was impacted by four companies operating almost entirely in the basin. In contrast, companies with more diversified operations did not show this similar plateau in their Anadarko operations.

The Williston Basin is another exception to the energetic completion trend – and still another story. Here, the decline seems to follow a seasonal pattern. While the Anadarko basin sprawls across Oklahoma and the northeastern corner of the Texas Panhandle, the Williston Basin is centered in North Dakota, where winter temperatures sink to frigid levels. Williston well completions fell in nearly all categories to hit the lowest point since January 2018.

Among other learnings, well completions data show the latest dip in official production statistics for January should not be mistaken for a tipping point in tight oil supply performance. While the fragmented nature of tight oil supply makes it hard to predict based on conventional techniques, new technologies developed by Kayrros represent a breakthrough in tight oil supply monitoring and short-term forecasting. These suggests that despite some variance across basins and individual companies, the overall resilience of tight oil supply will continue to challenge OPEC in its market management bid and will make it difficult for it to support oil prices without relinquishing market share.

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Kayrros adds further experience and global reach to existing strength

PARIS, 28 March 2019

Kayrros today announced an expanded team of energy experts focused on leveraging its proprietary data to deliver a widening range of global energy market analyses and insights. Led by Antoine Halff in New York, the global analysis team includes Augustin Prate and Laila El-Ashmawy in Paris, Alexis Berson in Singapore, Ted Hall in Houston, and Jeremy Sherby in New York.

The team counts more than 65 years of cumulative experience in tracking, interpreting, and analyzing energy market data around the world to extract actionable information.

“The rapid uptake of our industry-leading data analytics, combined with market information that includes conventional statistics and alternative data, has given us the opportunity to offer unique analytical insights to industry players and market participants”, said Antoine Rostand, president of Kayrros. “The strength of our team is unique in the industry with each member bringing complementary skillsets, deep industry expertise, and broad experience in key regional markets.”

“Kayrros cutting-edge technologies are a game-changer for oil market transparency, with new data calling for a new type of energy-market analysis”, added Antoine Halff, a veteran oil-market analyst and a Kayrros co-founder. “The point is not to duplicate what other energy consultancies and data providers are already doing, but to help end-users and industry stakeholders make the most of the radically new data that our groundbreaking technologies are producing.”

Halff is chief analyst and co-founder of Kayrros and senior research scholar at Columbia University’s Center on Global Energy Policy, where he has been leading the Global Oil Markets Program since 2015. Halff counts nearly 25 years of oil market analysis experience. Prior positions include head of oil analysis at the International Energy Agency and editor of its flagship Oil Market Report; lead industry economist at the US Energy Information Administration; head of commodities research at Newedge, then a joint-venture between Société Générale and Credit Agricole; and director of the Global Energy practice at political-risk consultancy Eurasia Group. Earlier in his career, he served as New York bureau chief of the Energy Intelligence Group and senior correspondent at Dow Jones Energy News Service.

A number of other new members of the team bring deep expertise and wide experience to the team.

Based in Paris, Augustin Prate joined Kayrros in March 2018 after seven years at BP, initially as a quantitative analyst supporting the oil derivatives and structuring businesses before progressing to crude and natural gas paper trading on the LNG trading desk. In previous positions, Augustin spent time at Société Générale on the equities algo trading desk. Augustin holds an engineering degree from Ecole Polytechnique in Paris and an applied mathematics degree from Columbia University in New York.

“The Kayrros business model was, from the start, based on blending best-in-class data science expertise with a deep foundation in energy industry knowledge,” said Prate, who leads a team that gives context, clarity, and relevance to the analysis. “In expanding our team, we are adding an extra layer of market analysis capacity to our rich expertise in data science, geology, and petroleum engineering. This will benefit our growing number of customers by extracting actionable insights from our data to give them an edge in their respective fields of activity.”

Before joining Kayrros, Paris-based Laila El-Ashmawy was a senior energy data officer at the IEA focusing on energy balances for Middle East and African countries. Prior to working for the IEA, she was a field engineer for Schlumberger in the US Gulf of Mexico and Persian Gulf in Qatar managing a team performing reservoir evaluation and production services on producing wells. El-Ashmawy has degrees in civil and environmental engineering, mineral and energy economics, and petroleum economics and management from Arizona State University, Colorado School of Mines, and IFP-School respectively.

Alexis Berson leads the analytics team in Singapore and has been with Kayrros since December 2018. Previously, Alexis was with the global commodities trader Glencore where he was a crude oil analyst. To help trading decisions, he built realtime analytics tools using a combination of alternative and statistical data. Stints at Veolia then followed time at EDF where he traded gas and power on European markets—all enabling him to bring invaluable market knowledge to the Kayrros team. Alexis has a master’s degree in engineering from Ecole Central Paris.

Based in the Kayrros Houston office, Ted Hall led market analysis and hedging advisory efforts for three years at EOG Resources, where he focused on global oil balances, specifically upstream US crude supply. Hall was previously a crude oil market analyst at Phillips66, where he supported the US crude supply and trading team and led long-term, global crude price forecasting for the company. He began his career on the commodity derivatives desk at Wells Fargo, covering US E&Ps. Hall is an Energy Risk Professional, certified by GARP, and holds a master’s degree in energy finance and trading from Tulane University.

In New York, Jeremy Sherby is an experienced energy market analyst with experience in upstream research at leading energy research and consulting firms, including Wood Mackenzie and Genscape, primarily focused on the Permian Basin and US Gulf Coast. He has been responsible for company level forecasting and evaluating E&P strategies, while working with clients ranging from investment funds to energy companies. Jeremy began his career at PwC in the assurance practice focused on utility and integrated oil and gas clients. He holds a master’s degree in finance from Tulane and a bachelor’s degree from Trinity University.

During the last twelve months, Kayrros has extended its presence and coverage to key energy markets while becoming the leading provider of alternative data to oil traders around the world. With locations in Paris, New York, Houston, London, and Singapore, the global reach and fast-growing product portfolio of Kayrros brings subscribers deeper market insight and expert analysis across North America, Europe, the Middle East, and the Asia-Pacific region. The company concluded a successful Series B funding in September 2018, establishing a new platform to accelerate growth. Recently added Kayrros reports include the LNG Liquefaction Plant Monitor—one of several new LNG monitoring reports, and the US Oil Well Completions Report that tracks well completion and fracing activity in the US Lower 48 in quasi-realtime.

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Venezuela: Fending Off Sanctions in the Dark

March 22, 2019

Since late January, Venezuela has become the second country after Iran to face US restrictions on its oil exports. In both cases, the publicity attached to the sanctions as a political weapon somewhat obscures their physical impact, albeit for different reasons.

One should never underestimate the ingenuity of oil exporters in getting around sanctions to preserve their economic lifeline. In the case of Iran, the US ban—which applies to all oil importers—has pushed large volumes of exports off the radar after many tankers in the national fleet turned off their transponders. These shipments, however, can be tracked via satellite imaging combined with a mass balance approach to the country’s oil movements.

In the case of the Venezuelan sanctions, exports to non-US countries are still permissible but the quality of the crude is a limiting factor in finding alternative outlets. Furthermore, the country’s production faces its own daunting homegrown problems, making a mass balance approach somewhat trickier than in the case of Iran.

Since Venezuelan production problems compound the effect of the US export ban, recent fluctuations in domestic crude storage are an imperfect measure of the bottleneck caused by the sanctions – especially in the wake of crippling blackouts. As if sanctions limiting Venezuela’s access to oil markets were not enough of a challenge, the country’s electricity sector was struck by a massive power outage on March 7, starting with a failure at the massive Guri hydroelectric plant that delivers 80% of the country’s electricity supply. Venezuela’s onshore crude stocks had inched up in the immediate aftermath of the sanctions, as crude that could no longer be shipped across the Caribbean to US Gulf refineries backed up in storage. Inventories then eased back—a potential sign of Caracas’ success in finding alternative buyers – even if at a discount. But the blackouts could also have curtailed production, curbing inflows into processing facilities and export terminals. More recently, stocks resumed their climb, a sign that production had not been totally crippled.

Satellite monitoring of oilfield activity suggests that the power blackout might not have had as devastating an impact on production as many have speculated, but the signs must be read with caution. Satellite monitoring confirms that the Guri blackout had something of a domino effect, hitting many of the country’s oil facilities including Puerto Jose, Venezuela’s biggest export terminal. Suspended operations at export terminals would have in turn been expected to hit the oilfields feeding into them. Kayrros monitoring, however, shows a surprisingly large number of fields kept flaring throughout the electricity outage. Then again, the state of disrepair of the country’s oil industry means that unlike elsewhere, flaring intensity in Venezuela may not be proportional to production but could also reflect problems with gas processing plants or field pressure.

Kayrros monitors 11 of the oilfields that feed into the crippled Puerto Jose terminal, totaling over 550 kb/d of production. Among those fields, only the 128 kb/d Petromonagas complex shows any sign of having gone cold. While it could be assumed that a nationwide power outage would immediately halt field production, Kayrros detected flaring at several producing facilities despite the blackout at Puerto Jose during March 7-12. At the 128 kb/d Petromonagas complex, there were no signs of flaring on March 8—after the blackouts—although the facility was flaring before the blackouts on March 3. However imperfect a sign of production flaring may be in the context of Venezuela, lack of flaring is an unequivocal sign of shutdown. In contrast with Petromonagas, the Mulata processing facility and several other field facilities—also linked to Jose—were flaring during the power outage.

While domestic storage has fluctuated, floating storage has gone through the roof: a clear sign of export bottlenecks. Floating storage levels are often unknown or unreported. Kayrros uses satellite imagery and machine-learning algorithms to track them as an input into crude oil mass balances. Kayrros found Venezuelan floating storage rose in January along with onshore stocks following the imposition of US sanctions. The builds accelerated in February even as onshore stocks fell back, and in March floating inventories hit their highest level since Kayrros monitoring began in January 2017. This relentless build shows Venezuela’s struggle to find export outlets to absorb the curtailed exports to the US. While India, Venezuela’s second largest customer after the US, raised its imports after US sanctions were imposed, New Delhi recently announced its decision to halt those shipments, thus turning up the pressure on Venezuela’s already rising floating storage. Reaching floating storage capacity could force Caracas to throttle down production even further.

While perhaps not quite as precipitous as some would have it, the fall in Venezuelan supply, compounding the effect of OPEC production cuts, is clearly a bullish factor for oil markets and a major driver of the steep stock draws recently measured in the US Gulf. Crude oil inventories in PADD 3, the US Gulf, plunged by 1 million barrels per day on average in the first half of March according to US Energy Information Administration data, driving aggregate US stocks down and pushing oil prices to 2019 highs. Venezuela, a founding member of OPEC and holder of some of the world’s largest oil reserves, is doubly hurt by international sanctions and self-inflicted wounds. Restrictions on US supplies of the diluent needed by Venezuela to blend and market its heavy crude are an aggravating factor. The complex interplay of these factors makes it challenging to sort out their impact. Kayrros monitoring suggests that having loaded onshore barrels onto ships to sell them, Venezuela had a hard time both refilling its onshore tanks and disposing of its cargoes. Continued flaring and recent stock builds show the former problem was relatively short-lived. The latter one may get worse before it gets better. Either way, satellite monitoring will be key to assess the outcome.

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Playing Hide-and-Seek With Oil Exports in Tehran

March 15, 2019

When it comes to US sanctions and Iranian oil exports, something doesn’t add up. But it takes satellite imaging and advanced data analytics to see what, and how. Empowered by the surge of shale oil production and the corresponding decline in its oil-import dependency, the US has increasingly leveraged oil sanctions as a tool of diplomatic statecraft.

Assessing the real impact of sanctions can be tricky. Iran, the number one target of US oil sanctions in volume terms, is a case in point. The consensus view is that Iranian oil exports have been averaging 800,000-1.25 million barrels per day (bpd), roughly half their pre-sanctions level. Kayrros satellite monitoring reveals that levels have already risen much higher.

After US sanctions came into effect last November, many Iranian tankers turned off their AIS signals, making it harder to track the country’s exports. Kayrros got around this problem by using in-house tech to expand on available import/export data. Not only has Kayrros been using synthetic aperture radar (SAR) satellite imagery to follow off-the-radar ships, but it combined this imagery with machine-learning algorithms to track Iran’s onshore and floating oil inventories and field production, thus assembling all the building blocks of a holistic mass-balance approach to the country’s oil sector.

Using this mass balance approach, Kayrros has been able to show that Iran’s oil exports further extended January gains into February, reaching their highest level since August 2018— if not earlier. The decline in Iran’s oil exports pre-dates the sanctions’ implementation and started in August. By October and November, even as Iran’s overall exports continued to slide, Tehran sold more oil off the radar than on, but these stealth cargoes failed to offset a nosedive in official exports. Since then, on-the-radar shipments have bounced back, and off-the-radar exports continue. In February, Kayrros identified several such stealth cargoes, of which just three remain unverified. If all such shipments were confirmed, Iran’s oil exports for the month would have reached their highest level since April.

After edging lower under sanctions, Iran field production has likely been on the rebound. Post-sanctions—as Iran’s export levels continued to decrease—Kayrros spotted regular field outages, suggesting that sanctions had begun to choke domestic production. Oilfield activity first stabilized in January, Kayrros monitoring shows. Since then, Kayrros spotted less frequency in field outages moving into February, while production reached the highest monthly average since sanctions took effect in November.

Despite higher production, Iran has been drawing down on its inventories, helping boost exports. Iranian onshore inventories built ahead of the sanction’s coming into effect in November but have since been decreasing. There has been no meaningful build-up of floating storage.

Importers of Iranian crude oil have an incentive to go on the radar while still showing a decline in imports from pre-sanctions levels. The waivers granted by Washington to eight countries in November are coming up for renewal in May. US officials this week stated the twin goal of turning up the pressure on Iran while keeping the oil market from overheating. Iranian oil importers have their own balancing act to play: according to press reports, those that have not imported any Iranian barrels of late are unlikely to see their waivers extended, but extensions are also meant to reward those that have been cooperating with the US goal of choking off Iran’s oil revenue. This double balancing act will likely continue to support both relatively robust on-the-radar shipments of Iranian oil and sizeable off-the-radar exports.

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Kayrros Secures $24M in Series B Funding to Expand Energy Market Penetration

New funding deepens the company’s crude oil market intelligence and expands its coverage across other energy markets that include petroleum products, natural gas, and power generation

PARIS, 18 September 2018 – Kayrros, the leading advanced data analytics firm, today announced that it has raised €21 million ($24.4 million) in Series B funding led by Cathay Innovation and backed by private investors including Index Ventures, AtlasInvest (the investment company under the lead of Marcel van Poecke), the Primat Family Office (Primwest), and Korelya Capital. Kayrros has now raised a total of €32 million ($37 million) from all funding rounds.

Kayrros captures and analyzes data across the energy sector using innovative technologies that include satellite imagery, natural language processing, Internet of Things, and machine learning. Combining technology with in-house energy expertise, Kayrros provides accurate and timely information on global market movements to help customers make more informed trading, investment, and operational decisions.

Kayrros has already established itself as a global leader in providing crude oil intelligence. The latest round of funding will allow Kayrros to further strengthen its coverage of the global crude oil value chain from production and storage through transport and consumption. Kayrros expects to bring new granularity across energy markets, and expand to other sectors including petroleum products, power generation, natural gas, and renewables.

“We are pleased to have secured our Series B funding as well as the confidence and backing of Cathay Innovation,” said Antoine Rostand, president and co-founder of Kayrros. “As we continue to rapidly grow, we look forward to developing our product offering and extending the leadership we have built with our unique crude oil intelligence to the complete energy market, from demand for diesel fuel in India to production of lithium in Chile.”

Jacky Abitbol, partner at Cathay Innovation, added: “We are very proud to support Kayrros write a new page in its success story. In addition to the strength of its management, we believe that Kayrros has tremendous growth potential as a global company. We know Kayrros’ industry quite well given our existing partnerships in the energy sector. We look forward to supporting the Kayrros team through our platform bridging Europe, Asia and North America.”

Since 2016, Kayrros has steadily carved a niche for itself as a cutting-edge data analytics firm in the energy sector and expanded its team from 8 to 100 engineers and scientists — strengthening its expertise in energy and data science, IT, petroleum engineering, sales, and marketing. Kayrros raised €9 million in Series A funding in January 2017 led by Index Ventures, allowing the company to attract some of the largest energy trading companies as customers and rapidly increase its global presence with new offices in Houston, London, and Singapore.

“The Kayrros team is led by some of the most experienced executives from the energy and technology industries,” said Dominique Vidal, partner at Index Ventures. “It has already brought an unprecedented level of transparency to the energy sector through its proprietary data sets. For the first time ever, companies can make reliable assessments and predictions about the world’s supply and demand for energy. It is therefore no surprise that Kayrros has already signed up customers who represent half of the world’s crude oil trading volume.”

Paul Degueuse, partner at Korelya Capital, also commented: “Kayrros has already radically enhanced data accessibility across the energy sector, and we at Korelya Capital are eager to support them as they expand to East Asia.”

About Kayrros

Kayrros is the leading advanced data analytics company that helps global energy market players make better investment decisions. Kayrros experts extract value from the integration of alternative and market data into unique product offerings across the energy chain. With more than 100 employees representing over 15 nationalities working from headquarters in Paris and offices in Houston, London, New York and Singapore, Kayrros delivers actionable information in near real-time using cutting-edge technologies. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data that help provide greater transparency into energy markets worldwide. For more information, please visit

About Cathay Innovation

Cathay Innovation is a global venture capital fund, created in affiliation with Cathay Capital Private Equity. It was founded around the shared conviction that supporting digital entrepreneurs by providing them with a platform bridging 3 continents – North America, Europe and China – constitutes a particularly powerful value-creation strategy. As a multi-stage fund, Cathay Innovation partners with visionary entrepreneurs, committed to driving change through technology. Such transformation is accelerated by leveraging Cathay Capital Private Equity’s extensive network with corporates and solid experience in operational excellence. Cathay Innovation has offices in San Francisco, Paris, Beijing and Shanghai. To learn more, please visit or follow us on Twitter @Cathayinnov.

About Korelya Capital

Founded and chaired by Fleur Pellerin, former Minister in charge of Digital Economy and former Minister of Culture, Korelya Capital is a VC fund with an investment capacity of €200 million. It supports French and European technology start-ups in their development with the ambition to create unicorns in Europe. It also offers them an opportunity to develop in Asia through the experience of NAVER and its subsidiary LINE.

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Simone Pugliese, +33 (0)6 33 22 58 42,

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Saudi Arabia Promised More Oil. So Why Are Prices Rising?

Kayrros was mentioned in a New York Times article, our data showed Saudi oil exports and storage levels rose in June but there is skepticism as to how much it can produce at these levels and for how long. Read the full article here.


Kayrros predictive global energy analysis project recognized for technological innovation

Paris, June 12, 2018 - Kayrros, an advanced data analytics company, was recently awarded a grant from the European Innovation Council (EIC) for its Predictive Analysis on the Worldwide Energy Sector (PAWES) project. The award is part of a larger grant given to 257 small and medium-sized companies (SMEs) from 31 countries. Though the PAWES project, Kayrros will deploy its cutting-edge technologies, including artificial intelligence and processing of satellite imagery, to provide predictive analysis and insights on the global energy market.

Kayrros was selected in part for its novel approach to delivering energy market insights, which combines data analytics, machine learning, and expert knowledge. Kayrros data scientists and energy experts use innovative technologies to retrieve big data from multiple sources before unifying the data formats and combining them into a dedicated IT infrastructure. They then process the data are processed with specific models and machine-learning algorithms to provide market forecasts and frequent updates on key global energy trends. The speed at which this is done enables Kayrros to deliver information in near real time and with less delay than existing publicly available sources.

“We’re honored to receive this EIC grant in recognition of our hard work and effort,” said Antoine Rostand, Kayrros president. “We will continue to build and maintain an innovative range of insightful products that bring greater transparency to the energy markets worldwide.”

The EIC awards its SME grant to start-up companies with high growth potential or companies with the potential to attain a net worth of over one billion euros. The EIC SME grant is designed to select, fund, and support start-ups as they grow and mature. Looking ahead, Kayrros is entering the second round of EIC applications, which could provide an award between 1.5 and 2.5 million euros.

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Kayrros increases its global reach with new presence in London and Dubai, coupled with offices in Paris, Houston, New York, San Francisco and Singapore

PARIS, 5 June 2018 — Kayrros announced the opening of its London office this week, with the appointment of Christer Odegaard as Managing Director, Business Development. In this role, Christer will head up Kayrros business operations in the UK and continental Europe and market the rapidly expanding range of Kayrros products covering the global oil supply, demand, and storage markets.

“London is the financial center of the world, home to many major energy corporations and investment firms. We are excited to extend our presence to London to work more closely with the key energy players based in the dynamic UK and European markets,” said Antoine Rostand, president of Kayrros. “Christer offers the perfect blend of financial market experience and energy sector knowledge, and we’re excited to bring him on board to lead our UK and continental Europe sales efforts.”

Christer has 20 years of business development experience in the financial and commodities markets, with a focus on oil for the last 10 years. Prior to Kayrros, Christer led sales and business development efforts in Europe, where he leveraged technical knowledge and data-driven insights to help companies improve their trading and investment decisions in the global oil market.

With the opening of its London office, Kayrros has continued the expansion of its office network planned for 2018. In the last six months, Kayrros has extended its presence to key energy markets in Houston, Singapore, Dubai, and London. Coupled with its locations in Paris, New York, and San Francisco, the greater global reach of Kayrros provides its subscribers with deeper market insight and analysis across North America, Europe, the Middle East, and the Asia-Pacific region.

“It’s an exciting time at Kayrros as we continue to grow our team, expand our global presence, and build our portfolio of near real-time products that help market players make better
energy investment decisions,” added Rostand.

About Kayrros

Kayrros helps global energy market players make better investment decisions by delivering greater insight the global energy market. Kayrros uses advanced data analytics and cutting-edge technologies, like machine-learning and intelligent algorithms, to analyze alternative and market data across the energy chain, gathered from sources such as satellite imagery, GPS and social media. By processing big data from multiple sources, Kayrros provides its customers with frequent updates and forecasts on key energy markets, including supply, demand, storage and transportation. The Kayrros team works out of offices in Paris, New York, Houston, London, and Singapore to deliver actionable information.
Through its combination of data, machine learning and expert insight, Kayrros helps provide greater transparency to the traditionally opaque energy sector. For more information, please visit

Media Contact

Thiago Costas, +33 (0)6 78 54 12 55,

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New office extends Kayrros presence for greater insight into Asian energy markets

PARIS, 3 May, 2018—Kayrros announced the opening of its Singapore office with the appointment of Chuanwei Foo, who will head Kayrros’ Singapore sales efforts as Managing Director, Business Development. In this role, Chuanwei will help develop Kayrros’ business operations in Asia and market the rapidly expanding range of Kayrros subscription services covering the global oil supply, demand, and storage markets.

“As Asia’s main trading hub, Singapore offers Kayrros the ability to work more closely with key players in the dynamic Asian market, including China, the world’s largest energy importer,” said Antoine Rostand, president of Kayrros. “Chuanwei is the ideal candidate to lead our sales efforts in Asia, given his extensive experience in the crude oil and petroleum products sectors.”

With 15 years of business development experience and 7 years in energy research, Chuanwei has a deep understanding of the data critical to clients in all areas of the energy market. His specializations include upstream exploration, production software and fiscal policies, downstream price reporting, and global liquid hydrocarbon cargo flows. Chuanwei holds a bachelor’s degree in Computer Science and a master’s degree in business administration from the University of Adelaide.

With the opening of its Singapore office, Kayrros expects to provide its subscribers with greater insight and deeper data analysis of the Asian market, especially as oil and gas activities in the region expand. In addition to its new Singapore office, Kayrros has offices in Paris, Houston, New York, and San Francisco.

About Kayrros

Kayrros is an advanced data analytics company that helps global energy market players to make better investment decisions. Kayrros experts extract value from combining alternative and market data across the energy chain. Working from offices in Paris, New York, Houston and San Francisco, Kayrros energy teams deliver actionable information in near real time. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data. For more information, please visit

Media Contact

Thiago Costas, +33 (0)6 78 54 12 55,

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Kayrros to apply advanced remote sensing expertise to improve accuracy of new open-access database on power plant operations

PARIS, April 12, 2018—Kayrros announced its collaboration with

the World Resources Institute (WRI) to develop the Global Power Plant Database, the first-ever comprehensive, open data source on power plants worldwide. Under
WRI oversight, Kayrros brings in-depth knowledge of remote sensing and machine learning to improve the accuracy and completeness of the database.

“Data on power plant operations is largely unreported and limited in scope, which creates barriers to understanding the global power sector,” said Antoine Rostand, Kayrros president. “We are excited to partner with WRI on this initiative. Together, we will offer greater transparency and insight on the global power sector by creating a more comprehensive, accurate database on power plant operations.”

The Global Power Plant Database includes data points on around 25,500 power plants from 162 countries, including their location, capacity, generation, ownership, and fuel type. The platform combines government and independent source data with crowdsourced data, including satellite imagery. Kayrros will apply its experience analyzing satellite imagery and other data sources and harnessing machine learning technology to identify and verify key features about power plants in the database.

“Kayrros technical abilities in satellite imagery analysis and machine learning have already helped to strengthen our project in a way we could not have done on our own”, said Aaron Kressig, a Researcher at WRI working on the power plant database. “We are grateful to Kayrros contributions so far and excited to see what else we can accomplish together.”

Kayrros is a global leader in the energy industry through the use of proprietary technology, focusing on satellite imagery and machine learning to illuminate trends and changes in the field. Data scientists produce reports and analyses on global oil and gas and energy markets, which result from state-of-the-art processing at increasing granularity across geographies and resource types. A collaboration between WRI and Kayrros is beneficial to both parties, and an extension will be sought in the future. For now, Kayrros is happy to have started working with WRI, and is looking forward this future of mutual development.

Additional information about the Global Power Plant Database can be found at

About Kayrros

Kayrros is an advanced data analytics company that helps global energy market players to make better investment decisions. Kayrros experts extract value from combining alternative and market data across the energy chain. Working from offices in Paris, New York, Houston and San Francisco, Kayrros energy teams deliver actionable information in near real time. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data. For more information, please visit

About WRI

World Resources Institute (WRI) is a global research organization that spans more than 50 countries, with offices in Brazil, China, Europe, India, Indonesia, Mexico, and the United States. Our more than 700 experts and staff turn big ideas into action at the nexus of environment, economic opportunity and human well-being.

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Thiago Costas, +33 (0)6 7854 1255,

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Advanced Data Analytics Company Enjoys Rapid Growth in Energy Market Research

PARIS, April 6, 2018—In recognizing its two-year anniversary, Kayrros announced a series of milestones in the development of its growing range of reports that monitor and analyze market fundamentals as well as predict market trends across the global energy system from production to consumption. With a team of 80 energy and data science experts representing 16 nationalities including 15 PhDs and more than 50 masters in mathematics, data science, energy and software engineering, based in offices in Paris, New York, Houston and San Francisco, Kayrros delivers valuable insight in near real time to energy analysts and investors on a broad range of market-relevant energy data as broad as lithium production in Peru or gasoline consumption in India.

Commenting on the start-up company’s rapid growth and market penetration, Antoine Rostand, Kayrros president remarked: “When our initial team of nine gathered in Paris in April 2016, we had little inkling of just how fast or how far we could grow. But backed by private investors, guided by advisory boards of industry experts in Europe and the US, and able to recruit an exceptional team of young data scientists and petroleum engineers we quickly developed an innovative range of insightful products that help our subscribers make better energy investment decisions.”

The energy market landscape is one of unusual opacity with traditional sources of data often subject to continual revision as facts and figures emerge on global supply and demand. In the past, this has meant that investment and trading decisions have often been out of phase with market needs resulting in sub-optimal financial performance and poor trend prediction. By harnessing propriety technology to machine learning and artificial intelligence in the analysis of alternative data from sources as varied as satellite imagery and autonomous identification systems, Kayrros has established itself as a leader in bringing greater transparency to energy markets worldwide.

With thousands of reports and analyses already published, Kayrros insights now form part of the workflow of some of the world’s largest energy traders. Currently, our reports are
provided to top players representing almost 38 million barrels of crude oil that is traded daily. The company’s network of established offices is expanding rapidly with new teams moving into offices in London, Dubai, and Singapore. Kayrros is also developing a new range of products focused on the balance between energy sources and the environment and was the
winner of the Big Data award at the recent Innovation 2030 Commission awards in Paris for the company’s Generating Reliable information for Energy and Environment (GREEN) program.

About Kayrros

Kayrros is an advanced data analytics company that helps global energy market players to make better investment decisions. Kayrros experts extract value from combining
alternative and market data across the energy chain. Working from offices in Paris, New York, Houston and San Francisco, Kayrros energy teams deliver
actionable information in near real time. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data. For more information please visit

Media Contact

Thiago Costas, +33 (0)6 7854 1255,

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Innovation 2030 Commission names Kayrros winner in Big Data Category

PARIS, March 26, 2018—Kayrros

is delighted to announce that the start-up company’s Generating Reliable information for Energy and ENvironment (GREEN) program has been named winner of the Concours Mondial
d’Innovation Big Data Category. The award was unveiled at a lunchtime event at the Banque Publique d’Investissement’s Hub in Paris. Many projects were entered in competition in a total of eight categories covering strategic energy and environment goals that ranged from energy storage through marine resources and new materials, to big data and innovations in security and threat protection.

Commenting on the award, Antoine Rostand, Kayrros president said “It is an honor for Kayrros to have been recognized by the French Innovation 2030 Commission as a winner in the Worldwide Innovation Challenge for the innovation and transparency we are bringing to the world of energy. The efforts of our dedicated and motivated teams of young professionals in energy and data have succeeded in adding new and more timely understanding to global energy supply and demand from both renewable and non-renewable resources.”

Kayrros, founded in Paris in 2016, combines extensive experience in energy with expertise in innovative data analytics to increase value from the analysis of both traditional data and new alternative sources of data such as satellite imagery. The award-winning GREEN project leverages Kayrros expertise in global energy to gain insight into the wind, solar, and electricity storage markets. The GREEN project is also designed to analyze global greenhouse gas emissions.

The Concours Mondial d’Innovation, or Worldwide Innovation Challenge, was launched by the French Innovation 2030 Commission to stimulate new ideas and innovations to confront the major challenges of the world of 2030. The Challenge is backed by the Banque Publique d’Investissement to enable the creation, growth, and development of entrepreneurial and start-up companies through financing opportunities and operational support.

About Kayrros

Kayrros is an advanced data analytics company that helps global energy market players to make better investment decisions. Kayrros experts extract value from combining alternative and market data across the energy chain. Working from offices in Paris, Houston, New York, and San Francisco, Kayrros energy teams deliver actionable information in near real time. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data. For more information please visit

Media Contact

Thiago Costas, +33 (0)6 7854 1255,

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The Oil Games Episode 4

​Creative Destruction

The fourth part of the Kayrros Oil Games is here. Previous episodes introduced the players, described the rules of the game, and linked classical game theory to oil-market movements.

The ghost of Joseph Schumpeter returns in the latest episode, which details how OPEC has dealt with the rapid rise of shale oil production so far. This is linked to the promise of creative destruction, coming out of nowhere in the last few years to change the playing field.

Episode four explains whether shale oil is just a flash in the pan or a more permanent change in the game.

Read The Oil Games episode 4

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Senior experts guide company development in oil and gas and financial sectors

NEW YORK, March 15, 2018—Kayrros is delighted to announce the appointment of energy industry experts Guy Caruso, Marianne Kah, and Frank Verrastro to its newly formed U.S. advisory board. The board will help guide the company as it expands and deepens its presence in the U.S. oil and gas industry and financial sector at a time of deep transformation in the global energy markets.

Announcing the appointments, Andrew Gould, Kayrros Advisory Board chairman said “On behalf of the entire company, I would like to extend a warm welcome to Guy, Marianne, and Frank in their roles as members of our U.S. Board. Their complementary professional experience stretching across the intersecting worlds of industry, government, and research will be vital in promoting and supporting the fast-growing activities of Kayrros in a region that is one of the top three oil producers in the world.”

Guy Caruso is a senior adviser in the Energy and National Security Program at the Center for Strategic and International Studies (CSIS). Prior to joining CSIS, he served as the Administrator of the U.S. Energy Information Administration (EIA) from July 2002 to September 2008. Before leading the EIA, Caruso had acquired more than 40 years of energy experience with particular emphasis on topics relating to energy markets, policy, and security. He first joined the U.S. Department of Energy as a senior energy economist in the Office of International Affairs. Guy has also worked at the Paris-based International Energy Agency, first as head of the Oil Industry Division, where he was responsible for analyzing world oil supply and demand as well as developments in the oil industry. He was later director of the Office of Non-Member Countries where he directed studies of energy-related developments in emerging economies.

“My career-long work with energy and economic data has shown me that we overlook many of the signals that wider data and more systemic analysis would identify”, said Guy Caruso. “The proprietary technology that Kayrros brings to the intersection of energy and advanced analytics links global oil storage, demand, and supply in a new and highly macroscopic way that deepens understanding and helps industry leaders and investors make better and more rapid decisions.”

Marianne Kah is a member of the Advisory Board and an Adjunct Senior Research Scholar at the Center on Global Energy Policy at Columbia University. She was previously chief economist of ConocoPhillips in Houston where she was responsible for developing the company’s market outlooks for oil and natural gas and served as the company’s expert in scenario planning. Prior to joining Conoco, Kah was manager of planning at the Cabot Corporation, a planner at the U.S. Synthetic Fuels Corporation, and a management analyst in the Energy and Minerals Division of the U.S. General Accounting Office. Marianne has been a frequent presenter and panelist at international energy forums and conferences that include CERAWeek, the International Energy Agency, the Aspen Institute’s Energy Policy Forum, the US Chamber of Commerce, the Columbia Center on Global Energy Policy, the King
Abdullah Petroleum Studies and Research Center, and the International Energy Forum in Riyadh, Saudi Arabia.

“With its new and highly innovative approach to integrating and analyzing all forms of data related to petroleum supply and demand, Kayrros is a dynamic organization that seeks to dramatically improve both the timeliness and the quality of the information available to oil and gas market decision-makers” said Marianne Kah. “I very much look forward to bringing further insight to Kayrros research in the U.S. markets and its relation to global industry challenges.”

Frank Verrastro is senior vice president and trustee fellow, Energy and National Security Program at the Center for Strategic and International Studies (CSIS). From 2012 to 2017, he held the James R. Schlesinger Chair for Energy and Geopolitics. Prior to that he served as director of the CSIS Energy andNational Security Program. His extensive energy and management experience spans over four decades in energy policy, operations, and project management positions in both the U.S. government and the private sector, including serving as Senior Vice President for Pennzoil Company. Frank has written extensively on energy policy, oil and gas markets, and security topics, served on the Advisory Board for the National Renewable Energy Laboratory, and is a member of both the National Petroleum Council and the Council on Foreign Relations.

Commenting on his appointment Frank Verrastro said, “The rapid growth in shale oil production in the United States, and the potential for its development in other countries, has dramatically changed the global balance of crude oil supply and demand. At a time of such rapid movement, it is essential that financial and industry players be able to draw on the advanced market-specific analytics that Kayrros and its proprietary technologies can provide”.

With US offices in New York, Houston, and San Francisco, Kayrros is already bringing greater vision and deeper insight to the North American market as oil and gas production accelerates. Since its creation in Paris in 2016, Kayrros has been using increasingly sophisticated techniques to bring greater transparency to energy markets worldwide.

About Kayrros

Kayrros is an advanced data analytics company that helps global energy market players to make better investment decisions. Kayrros experts extract value from combining alternative and market data across the energy chain. Working from offices in Paris, Houston, New York, and San Francisco, Kayrros energy teams deliver actionable information in near real time. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data. For more
information please visit

Media Contact

Thiago Costas, +33 (0)6 7854 1255,

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Advanced data analytics company expands global network driven by a growing need for near real-time energy market information

PARIS, 31 January 2018 — Kayrros officially opened its new Houston office with the hire of Dane Litwiller, who will head Kayrros’ Houston sales force as Director, Business Development, and is charged with helping develop Kayrros’ activity in the US and marketing Kayrros’ rapidly expanding range of oil and gas supply and demand subscription services.

“With strong growth in the global energy markets on the back of robust economic growth, investors and analysts are demanding increasingly timely investment intelligence. We are therefore extremely excited to extend Kayrros’ presence to Houston to work more closely with key players in the dynamic North American market,” said Antoine Rostand, president of Kayrros. “Dane is the perfect candidate to lead our sales efforts in the central and western United States, given his extensive experience in the crude oil and petroleum products sectors.”

After 10 years of professional in sales and business development, Dane has a deep understanding of the data critical to clients across the energy spectrum. Prior to joining Kayrros, Dane specialized in marketing energy data for better understanding of waterborne shipments of crude oil and petroleum products worldwide. Dane holds a bachelor’s degree in business administration from the University of Illinois.

With the opening of its Houston office, Kayrros can now provide its subscribers with deeper insight and data analysis of the North American market as oil and gas production in the United States rapidly accelerates. The new office is one of a number the company expects to open in 2018. Since its creation in Paris in 2016, Kayrros has been harnessing proprietary data analysis technology with increasingly sophisticated measurement techniques to bring greater transparency to energy markets worldwide.

About Kayrros

Kayrros is an advanced data analysis company that helps global energy market players make better investment decisions. Kayrros experts extract value from combining alternative and market data across the energy chain. Working from offices in Paris, New York, San Francisco, and Houston, Kayrros experts deliver actionable information in near real time. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data. For more information please visit

Media Contact

Thiago Costas, +33 (0)6 78 54 12 55,

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Oil Briefly Reaches $70 as Buoyant Global Economy Bolsters Demand

​Kayrros was mentioned in a New York Times article refering to oil prices. President and Founder Antoine Rostand was quoted on it. Read the full article here.

Radar des Valos: les start-up françaises de Software - Adtech les mieux valorisées

Kayrros was mentioned as one of the best valued startups in the 4th edition of the Radar des Valos from Challenges

Oil Prices Hit High, Before Sliding, Amid Disrupted Supply

​Kayrros analysis on Iraq production disruptions, in The Wall Street Journal.


Select Kayrros data and analysis now available on the Bloomberg Terminal

NEW YORK, SAN FRANCISCO, PARIS, 29 November 2017—Kayrros today announced that it will publish a selection of Kayrros global oil and gas energy market reports and analyses on the Bloomberg Terminal.

Kayrros energy market reports have already attracted a fast-growing customer base and through the Bloomberg Terminal, will now provide new insights to leading financial professionals who seek increased transparency in understanding the global oil and gas markets. Bloomberg Terminal users will be able to consult key Kayrros data reports and analyses that result from state-of-the-art processing at increasing granularity across geographies and resource types.

“The global energy markets have long suffered from a lack of transparency that has hindered financial decision-making in the past,” said Antoine Rostand, Kayrros president. “The rapidly increasing number of alternative sources of data that add new and pertinent information can now be integrated with traditional supply and demand data to provide a near real-time picture of market drivers and behavior across platforms including the Bloomberg Terminal. This novel approach will be of value to analysts and investors alike.”

Kayrros possesses a unique combination of oil and gas market knowledge and experience with advanced data analytical capability. Kayrros extracts value from alternative and market data across the energy space to improve estimates and deliver more accurate forecasts.

Additional information about Kayrros can be found at or on the Bloomberg Terminal by typing KROS <GO>.

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The Oil Games Episode 3 - OPEC Market Share Explained by Game Theory

In the first two episodes of the Oil Games, we met the Players, discovered the Rules of the Game, and began to understand the strategies of the various Players. We understood that oil and gas discoveries just like any other technological innovation were first and foremost a matter of financing. We asked ourselves the question what drives investors to allocate funding to the pursuit of discovery and found that the answer was just the same as in any other business, namely the expected return on investment. But we also understood that shale oil changed the rules. Is shale oil indeed the ultimate realization of Schumpeter’s promise? Is it really a break from the past, or is it a flash in the pan and just like any other source of oil?

Episode 3 starts addressing these crucial questions. We will go step by step to understand how both game theory and economic analysis move the invisible hand that guides the behavior of the Players to lead to a remarkably stable OPEC market share. Read full article here.

Kayrros COO speaks at the Codex Conference

​In September 2017, Simone Pugliese spoke about how alternative data can change the energy markets. Watch his presentation here.

Permian Dynamics Shifting As Drillers Double Down

Kayrros research on well productivity in the Permian mentioned in the Newsbase. Read the full article here

Oil Edges Higher on Geopolitical Tensions

Kayrros analysis of satellite data reflecting of oil field activity in North Iraq mentioned in the Wall Street Journal.

In charts: has the US shale drilling revolution peaked?

​Kayrros analysis on Permian well productivity mentioned in The Financial Times

Kayrros mentioned in The Financial Revolutionist

​Read article here


Unique analytics platform aggregates crude oil inventory volumes from worldwide locations

PARIS, NEW YORK, SAN FRANCISCO, 4 October 2017—Kayrros today announced the release of a new product offering for its growing subscriber base. The Kayrros Global Crude Oil Inventory Tracker aggregates data derived from proprietary satellite imagery from 43 worldwide locations in the US, China, India, MENA, Venezuela and the Caribbean. This unique proprietary method allows Kayrros to track a total of approximately 1.5 billion barrels of crude oil storage capacity. Before the end of this year Kayrros will add approximately 200 other locations around the globe.

“Kayrros coverage of the global crude oil storage market with this level of granularity allows better visibility on actual crude oil inventory levels and more clarity on regional imbalances that were hidden up to now”, said Antoine Rostand, Kayrros president. “When added to our existing coverage of oil and gas supply and demand worldwide, this new research capability makes Kayrros the only energy alternative data company that integrates near real-time data across the value chain thus bringing greater transparency via actionable market intelligence and insight.”

Kayrros possesses a unique combination of oil and gas market experience and advanced data analytics capability backed by substantial industry knowledge. Kayrros products have proven that publicly available data can be supplemented with alternative data and advanced technology to identify information gaps, achieve additional market transparency, and establish a predictive edge over standard industry benchmarks.

About Kayrros

Kayrros is an information service company that helps global energy market participants make better investment decisions. Kayrros experts extract value from combining alternative and market data across the energy chain. Working from offices in Paris, New York, and San Francisco, Kayrros experts deliver actionable information in near real time. Kayrros solutions are rapidly scalable and continually expanded to new geographies and new sources of data. For more information please visit

Kayrros media contact: Thiago Costas, +33 (0)6 78 54 12 55,

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Unfinished Business: Why Oil Output May Surprise

Estimates of U.S. crude-oil production were probably too high because drilling didn’t translate into completion, but the news isn’t all good for oil prices. More in The Wall Street Journal.

Kayrros Series A deal mentioned in Fortune

Read article here

The impact of Harvey

How the tropical storm in Texas has left the oil industry facing multiple difficulties. Another mention to Kayrros co-founder Antoine Halff in the Financial Times.

Storm Harvey raises awkward questions over US energy ambitions

Concentration of oil and gas infrastructure on Gulf Coast leaves it vulnerable to weather events. Read Kayrros co-Founder Antoine Halff’s article in the Financial Times.

Storm Harvey exposes Achilles heel for global energy market

Kayrros co-founder Antoine Halff mentioned by the Financial Times article on the exposure of US energy infrastructure to Gulf cost storms. Read more here.

From Katrina to Harvey: Storm Resilience in the Age of Shale

“Three days after Hurricane Harvey made landfall near Houston, rains continue to lash the region, unleashing catastrophic flooding. Apart from the human suffering, the storm’s devastating impact should also serve as a powerful reminder that no country, no matter how large its oil and gas production may be, is fully insulated from the risk of an energy supply disruption.” Read more about Harvey’s impact and associated risks to the energy supply here.

Overestimation of US Gas Production Growth

“Kayrros projects that domestic output will average 73.7 billion cubic feet per day in October, far lower than the US Energy Information Administration’s (EIA) prediction of 76.9 Bcf/d.” Full article available in the Natural Gas Week from Energy Intelligence.

Kayrros anticipated shift in US lower 48 oil supply and storage

Kayrros anticipated shift in US lower 48 oil supply and storage confirmed by latest market data. See note ​here.

The Oil Games Episode 2

In the first episode of the Oil Games we met the Players and discovered the Rules of the Game. A surprising discovery of that first episode was that a ‘discovery’, whether in the world of innovation or in the search for oil and gas, doesn’t rhyme with ‘surprise.’ It might indeed come as a surprise that discoveries have nothing to do with the legend of the great scholar or the magic of serendipity. Oil and gas discoveries, like technological innovation, are first and foremost a matter of budget. In the search for underground deposits, just as in the race for the next disruptive technology, funding is the key. The business of discovery is a business like any other. So what drives investors to allocate funding to the pursuit of discovery? As always, it is the expected return on investment. And the return on investment itself depends on the structure of the industry in which we are working—monopolistic, competitive, or somewhere in between. Which brings us back to game theory, and the strategies adopted by the various Players. Read the full article here.

Bottlenecks Are Holding Back a Second Shale Boom

“The U.S. is now less than 200,000 barrels per day off its June 2015 high of 9.6 million barrels per day, and analysts expect production to keep growing. But as good as all of that sounds, it could be even better. As the FT reports, shortages of drilling rigs and roughnecks to operate them are holding back even more impressive output increases” See article here

La production de pétrole de schiste victime de son succès aux États-Unis

“Décidément, le marché pétrolier n’en finit pas de déjouer les pronostics. Le rebond de la production de brut aux États-Unis pourrait être moins important que prévu, note le Financial Times.” Selon Le Figaro.

Shortage Of Fracking Crews Slows The Shale Boom

“Some of the constraints that shale companies will run into are on the access to oilfield services (OFS), including rigs, equipment and personnel, according to Kayrros, a French research firm backed by the former CEO of OFS giant Schlumberger, and reported on by the FT”. Read the full article here.

French Consultancy Warns of Slower US Oil Growth

The main theory that we have is that there is more inertia in the ramping-up of the fracking sector,” Antoine Rostand, president of Kayrros, told Oil Daily. “We see, obviously, production growth, but probably slower than what most analysts are projecting.” Full article available in the Oil Daily from Energy Intelligence.

US oil output growth hit by lack of operators and equipment

Kayrros President, Antoine Rostand, on the US crude oil production growth in the Financial Times.

The Oil Games - Chapter 1

The Oil Games are as a series of interconnected episodes in which we will try to explain and predict market behavior using Kayrros’ extensive knowledge of the energy industry, the world economy, mathematics and game theory in particular. The series’ target audiences include the practitioners, investors, and observers of the oil industry who are interested in finding new ways of understanding this fascinating business. The authors are Jean-Michel Lasry, Antoine Halff and Antoine Rostand. This is an ongoing story with future episodes being published in sequence by Kayrros. Here is the inaugural installment, in which we propose to apply the economic model of innovation to the oil and gas sector.Read the full article here.

Transparency used to be a dirty word in energy — now it’s turning into the norm

Article on the need for greater transparency in the energy sector and how Kayrros is helping in that space, in the Business Insider UK

Offshore rig operators reel from oil price rout

Antoine Rostand, President of Kayrros, comments on the impact of low oil prices for offshore rig operators in the Financial Times.

Oil veterans’ new frontier

Kayrros revolutionizing energy markets - Andrew Gould, Chairman of Kayrros’ Advisory Board and Antoine Rostand, Kayrros President, on their new venture, in the Financial Times.

Oil Field Services – A seller’s market in the making?

Oil Field Services – A seller’s market in the making: Antoine Rostand, President of Kayrros , explains how the current landscape is likely to impact mergers, acquisitions and consolidation in the oil field services sector.

The recent increase in oil price to slightly above $50 is a welcome development for the oil and gas industry, but I do not foresee any dramatic short term changes in the direction taken by oil and gas companies to implement aggressive cost reduction measures and tighter management of new projects. One of the sectors severely impacted by these sweeping changes is oil field services - a vital segment in securing the longevity of the industry as a whole.

Oil field service providers have historically jostled for lucrative contracts with international and national oil companies (IOCs and NOCs) but with the oil price decline, these companies have reduced CAPEX and OPEX and squeezed service providers on their margins.

While for each individual oil and gas operator this may make perfect sense in the short term, what may not be as evident is that when the whole industry acts in this way it causes years of disruption for the oil field service industry. In response, oil field service firms are forced to take drastic measures. Measures, which cannot easily be undone and a have far-reaching impact on four key drivers required to meet any future increase in demand for oil field services as and when production increases.


With personnel being at the heart of any oil and gas operation, it is never an easy decision to let people go in order to drive down costs. Nevertheless in the current market, oil and gas companies are resorting to curbing recruitment or implementing hiring freezes which have had knock-on effects on the global oil and gas recruitment pool. Universities are having to shrink their curriculums, leaving fresh graduates frustrated with their career choices and most likely seeking alternative career paths in the long run. This will no doubt have hard-hitting medium-to-long-term consequences for an industry that has for years been preparing itself for the ‘big crew change’.


At the sharp end of upstream oil and gas, we are witnessing the very real impacts of persistently low oil prices with all but the latest 6th and 7th generations of technologically advanced rigs being retained (stacked) for a much-anticipated future uptick in the workload. For the rest, unfortunately the scrap yard beckons. It is a tough decision to make as even by stacking expensive drilling rigs and platforms, oil and gas operators face losing thousands of dollars daily for crew and equipment upkeep – upwards of $40,000 a day in regions like the Gulf of Mexico for instance.


The US shale market – seen as the proverbial canary in the coalmine for the rest of the conventional oil and gas industry – has been hit hard by low oil prices. Between 2012 and 2015 key shale oil and gas producing regions in the US have witnessed drilling activity drop off dramatically. Oil service majors who serve these regions and who are already under immense cost-reduction pressure, are opting to dig into and cannibalize existing inventories. Additionally, in the current market, these companies are likely to hike up their rates to recover costs before considering investment in new hardware.

Engineering Procurement and Construction

Current research suggests that the order books of engineering procurement and construction (EPC) companies could potentially dry up within the next two years due to projects being cancelled or put on hold. Without the availability of a minimum level of oil and gas project work and with no new projects on the horizon, capacity is being eroded among EPCs as well.

As oil prices are anticipated to rise so too will the need for oil service companies by NOCs and IOCs, however, when that happens, the fear is that there is likely not going to be the required service capacity in the market.

There will also be a lack of qualified people, rigs and fracking equipment. Add to the mix, the impact on EPC contractors and you have a perfect scenario for a seller’s market for services. It’s a scenario of collective suicide for oil and gas companies who will not be able to ramp up production as rapidly as they think as they will have to wait for service companies to catch-up and rebuild the industry.

This new landscape has the potential to create fertile ground for a new round of mergers, acquisitions and consolidation in the oil services sector. The picture for the industry is anything but rosy going forward but all is not lost - there are clear steps oil and gas operators can employ to remedy the current situation.

*The findings in this post have been presented to the OPEC R&D Forum

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Kayrros Forecasts 101

Kayrros utilizes a comprehensive machine learning methodology to forecast future supply and demand.

The first stage involves collecting data from a wide variety of sources and applying corrections when data is missing.

For Supply forecasting, the main inputs of the model include economic indicators like prices, activity measurements such as the rig count, fracking and drilling rates together with external factors such as weather forecasts. Demand forecasts are based on features including but not limited to macroeconomics data (population, GDP growth, unemployment, CPI, imports/exports), industrial indicators (production index, vehicle production, vehicle sales, car energy efficiency, air passenger and freight traffic), weather data, financial data (market prices of crude oil, gas and other petroleum products).

The next phase involves feature engineering, where raw data are transformed and combined to find the best predictive representation of the inputs. The best features and models linking data to the predictions are selected by an adaptive back-testing procedure, where the Kayrros algorithm learns the best link between the data and the relevant benchmark.

Specific to consumption forecasts, and as demand data is highly seasonal, Kayrros uses an additive model to separate the effects of trends and seasonality from the main consumption. Algorithms include both a linear and a non-linear forecast, to best capture the trend changes.

Finally, the performance of the model is evaluated through a thorough back-testing approach which simulates the output of the model from past data to predict out-of-sample future benchmark values, just like a trading strategy would do for prices.

Published on 10/20/17

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