Many of Australia's oil and gas giants are on the rise today, with the Oil Search Ltd (ASX: OSH) share price up 2.66% in just the first hour and a half of trading today, and the Woodside Petroleum Ltd (ASX: WPL) share price up 1.53% in the same time.
So, should investors be buying into ASX energy stocks this week?
Saudi Arabia signalling higher energy prices
Saudi Arabia's new Energy Minister, Prince Abdulaziz bin Salman, has recently given the world reason to expect rising oil prices.
Prince Abdulaziz bin Salman was part of the team that negotiated the 'OPEC+' agreement, also sometimes known as the Vienna Group. The short version is that the existing OPEC 14-member cartel is joined by 10 more oil-producing nations, including Russia, Kazakhstan and Mexico, to cooperate on global oil prices. Combined, the OPEC+ nations represent 90% of global oil reserves, giving them incredible influence over global prices — provided they can get along and continue to agree on limiting production.
With Prince Abdulaziz bin Salman, vocally supportive of the agreement he helped broker, taking control of the Saudi Arabian Energy Ministry over the weekend, oil prices have climbed to six-week highs.
That's good news for every kind of energy company worldwide, including Aussie giants like Woodside and Oil Search. Both companies have interests in oil and natural gas both, and while higher oil prices will benefit both, the news in LNG has been positive for both companies lately, too.
A new project on the table, and old ones shining again
According to a recent report in the Australian Financial Review, Woodside is in the running to develop a new gas resource off the north-west coast of Australia, currently owned by Thai oil explorer PTTEP. The Cash-Maple gas fields could be worth US$300–$500 million to the producer that develops the project, depending on PTTEP's share of the deal.
Woodside is already working on ambitious resources, with the US$20.5 billion Browse project and the US$11 billion Scarborough LNG project. Despite that, the experienced offshore producer could be the perfect candidate to finally bring the Cash-Maple resource to market after PTTEP has held it for years but failed to achieve much with it.
Meanwhile, Oil Search recently had some good news about a major project in Papua New Guinea. Last week the Papua New Guinea government released the results of a review into the Papua LNG Gas Agreement. The review had meant months of uncertainty for Oil Search. This all came as a result of Papuan political instability and had dragged the Oil Search share price down since April. Even good financial results in the company's half year report weren't enough to counter the instability.
With the new Papua New Guinean leadership's review into the LNG agreement finally completed, and the results good for Oil Search, the share price has taken off. Its gains last week and so far this week have already been significant, but there's still room to rise before it hits the highs from before the Papuan political chaos again.
As news continues to point to higher energy prices worldwide, high quality providers like Oil Search and Woodside look good.
