Happy Friday girls and boys - this is Both Barrels. Your daily dose of all things oil, gas, and energy, without the hot air.

Here’s what’s up today:

• 🛑 Energy rationing in Europe

• ⚛️ Uranium prices on the rise

• 🐚 Shell souring on carbon offsets

plus plenty more. Let’s dive in…

📈 The numbers

Oil prices are climbing into the mid-high $80s at the end of a strong week as OPEC+ signals its continued price support and crude inventories keep declining.

Meanwhile, uranium prices are hitting new multi-year highs of ~$60/lbs as momentum continues to shift towards nuclear power around the world.

🗞️ Well-headlines

 🇺🇸 North America

• AltaGas has acquired the Pipestone natural gas plant and Dimsdale storage facility in Alberta, Canada, from Tidewater Midstream for $650m in cash and shares.

• The Canadian government is set to reveal measures to reduce emissions from its oil & gas sector. Previous suggestions that the industry could reduce its emissions by 42% by 2030 were strongly criticized by the sector as being too restrictive.

• Equinor and BP have asked authorities for a 54% increase in the price they receive for power generated from 3 planned offshore wind farms in the US. They blame rising interest rates, inflation, and supply chain disruptions for the rising costs.

  • Another day, another out-of-the-money offshore wind project. They are now asking for ~$180/MWh which is more than double average wholesale power prices in the US.

🇪🇺 Europe

• The UK’s grid operator has said it will again pay consumers this winter to reduce power use to avoid shortages. Participants are paid to turn off appliances such as ovens and dishwashers when electricity demand is high.

  • Make no mistake, this is effectively rationing. Bills will climb to pay for this. Europe’s energy policies are failing miserably.

• Gasoline demand has hit decade highs all across Europe despite the emergence of EVs.

  • Most of the climb has been attributed to a switch back to gasoline from diesel after various scandals such as the infamous dieselgate shenanigans in 2015.

• Vaar Energi is increasing its O&G exploration activity in the Arctic Barents Sea, offshore Norway.

  • The Barents Sea is believed to hold huge quantities of resources but is relatively under-explored. There is only one producing oilfield in the Barents, Goliat, which Vaar operates.
    

🇸🇦 The Middle East

• Iraq is looking for more foreign investors to help expand its domestic oil & gas production, according to its Oil Minister.

  • Increasing domestic production will not only generate more $$$ but will also help reduce reliance on gas imports from Iran.

🇨🇳 Asia

• Santos has sold a 2.4% stake in PNG LNG to Kumal Petroleum for $736m. The deal also includes a call option for Kumal to buy an additional 2.4% before July 2024.

📍Everywhere else

• Global LNG regas capacity is expected to reach 163 bcf/d by the end of next year, a 16% increase from the start of 2022. Most of this growth is in Asia and seven countries will be bringing online their first regas LNG import terminal by the end of 2024.

  • The global LNG industry is becoming increasingly liquid as more import and export facilities support additional flows and flexibility across market.

• Workers at Chevron’s Gorgon and Wheatstone LNG facilities in Australia have rejected a latest offer. Talks will resume to try and avoid strikes that are scheduled to begin next week.

  • These two plants alone account for over 5% of global LNG supply so it’s quite a big deal!

• Azule Energy, a JV between BP and Eni in Angola, Equinor, and ANPG have signed a PSA to jointly explore the hotly anticipated Block 31/21, offshore Angola. The initial 5 year exploration period will involve drilling a single exploration well.

🌍 Geopolitics & macro

• Without giving details, Russia’s Deputy PM Novak has said that Russia has agreed with OPEC+ partners to reduce its oil exports. Specifics will be announced next week.

  • Russia’s current output cut sits at 0.5 mmb/d, which is due to last at least throughout September. Saudi’s cut is 1 mmb/d. With Brent heading back towards $90/bbl, the cuts are having the desired effect. It’s unlikely that Novak meant Russia would deepen its cuts. An extension into October is more likely.

💨 Carbon, Climate & other energy stuff

• Shell has ditched its plans to spend $100m a year to generate 120 million carbon credits by 2030 as part of its net-zero plan. It isn’t abandoning carbon credits altogether but is reeling in its ambitions in light of the lack of quality supply of credits.

  • Shell’s focus has been on nature-based carbon credits (eg reforestation and forest protection) which have come under fire in recently for poor quality and lack of transparency.

🛢️Bottom of the barrel

Gasoline demand in Europe is rising as drivers switch away from diesel and keep hold of inefficient older cars. So much for EVs destroying oil demand…

Here’s an insightful Twitter thread from Brian Gitt about why EVs may not hit oil demand as much as people think:

👋 Before you go

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Thanks for reading. Have a great weekend! 🛢️🛢️