2nd November 2023

Good morning ladies and gents. This is Both Barrels, your daily dose of all things oil, gas, and energy, without the hot air.

• 🇮🇷 Iran’s futile oil embargo call

• ⛷️ Funding Saudi’s ski resort

• 🍃 Musk’s views on environmentalism

• ⚖️ Yukoil’s $60bn legal battle drags on

• ➕ Russia becoming China’s energy lapdog, the hidden power of traders, underwater heritage sites, COP renewable proposal

Let’s go…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Modest build in inventories - crude stocks rose by 0.8 mmbbls while gasoline climbed by 0.1 mmbbls, according to the EIA.

• Chesapeake and Vitol LNG supply deal - the 1mtpa, 15-year deal is linked to the JKM price and will start in 2028.

• Some Q3 earnings highlights: Marathon raises dividend and output rises; Shell planning more buybacks as it hits estimates; Chesapeake shares climb after topping estimates.

🏰 Europe

• Yukoil’s 20 year legal battle drags on - a London court ruled that shareholders of the defunct Russian oil company can take the Russian government to trial over an unpaid $60 billion arbitration award. The shareholders say the government drove the country’s once biggest oil company into bankruptcy for political reasons. Good luck guys.

🕌 The Middle East

• Chevron sticking with Israel - “ours is a long term business”, commented a senior exec. The ongoing conflict in the region hasn’t changed the company’s E&P plans in the East Med, offshore Israel, where it operates major gas fields including Leviathan and Tamar.

• Lebanon’s sloppy seconds - offshore Block 4, which was relinquished by IOCs last month, will be offered up again to interested bidders.

⛩️ Asia & Oceania

• China & Russia’s energy ties deepening - without giving details, CNPC said it’s in talks with Rosneft, Gazprom, and Novatek over joint development of oil & gas fields, pipeline expansions, and hydrocarbon trade. Russia is becoming increasingly reliant on China after it lost its key energy customer in Europe when it invaded Ukraine.

• India eyeing up cheap Venezuelan crude - ever the bargain hunter, the energy minister of the world’s 3rd largest crude importer said India would buy Venezuelan oil provided the price is right.

• “Best and final offer” for Origin rejected again - Origin’s largest shareholder has said Brookfield’s new bid of $10.5bn (an 8% increase from the last offer) is still too low.

• Australian court halts work on Santos gas pipeline - the ruling follows opposition by indigenous groups that pipelines at the Barossa offshore project will disturb underwater heritage sites. Santos, which denies the claims, was hours away from starting the work. Anyone ever seen underwater art or burial sites? I’m curious.

🦁 Africa

• Vitol takes control of Uganda fuel supply - under a new deal, the traders will be exclusively responsible for supplying the country’s fuel imports. Previously, land-locked Uganda has sourced its fuel via a fragmented system with neighboring Kenya, which it deemed vulnerable to disruptions. This reminds me of a fascinating book I’m reading at the moment, called The World for Sale, that’s all about the hidden power of commodity traders.

• Congo delays deadline on controversial blocks - the bid deadline to bid on the 4 blocks in its eastern region has been delayed by 6 months until spring next year. One of the blocks overlaps the Virunga National Park, which is home to endangered gorillas. Another recommendation: there’s a really great documentary on Virunga. I promise I didn’t cry.

• Niger building crude pipeline to Benin - the proposed 2000km pipeline will allow Niger, one of the world's poorest countries, to sell its crude on the international market for the first time, via the Benin port of Seme.

• Egypt could resume LNG exports soon - Eni’s CEO said that Egypt’s two LNG export facilities, which have been suspended since June due to skyrocketing domestic demand and reduced volumes from Israel, may restart in December.

🌍 GEOPOLITICS & MACRO

• Iran’s futile call for oil embargo - Supreme Leader Ali Khamenei wants producers to stop selling oil to Israel but other OPEC nations were quick to downplay the idea. Besides, most of Israel’s 300 kb/d crude imports come from Russia and Azerbaijan anyway, not Arab OPEC nations. As we wrote a few weeks ago, it’s highly unlikely OPEC will wield the oil weapon again anytime soon. 2023 isn’t 1973.

• Saudi’s budget deficit - lower oil prices and lavish spending meant Saudi booked a budget deficit of $9.5bn in Q3. Why is this important? Well, it shows that the masters of the oil market need consistently high oil prices to pay for their grand plans like Vision 2030, which includes building a ski resort…

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• What next for offshore wind? - BP’s head of low carbon said the US offshore wind market is “fundamentally broken”, but the White House said it’s still committed to the sector after a spate of project cancellations and write-downs.

• US, EU, and UAE looking for renewable target support - ahead of COP28, these countries are looking to get other nations onboard for a commitment to triple global “renewable” capacity by 2030 and improve energy efficiency by 4% per year. The draft proposal also calls for "the phase down of unabated coal power," including ending the financing of new coal-fired power plants. To become part of the formal outcome of the talks, any proposal must win unanimous approval from the nearly 200 nations involved.
  

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO 

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Thanks for reading. Have a day out there. 🛢️🛢️