3rd January 2024

Morning, morning.

Bit of a slow news day today as the world slowly emerges from its holiday slumber. But here’s what’s up:

• 🗽 THE global energy superpower

• 🥇 US takes LNG exporter top spot

• 🤔 Telsa bigger than Aramco + Apple?

• 💥 Israel strikes in Lebanon

• ➕ plus Permian earthquakes falling, Russian piped gas still reaching Europe; Chevron takes a $4bn hit.

Let’s take a look…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• US takes LNG exporter top spot in 2023 - with the full year numbers now in, the US has officially leapfrogged Qatar and Australia as the world’s largest exporter of LNG. In 2023, US exports hit ~91 mtpa, an annual increase of 15%. The US’ rapid capacity growth is set to continue this year as the Golden Pass and Plaquemines facilities come onstream.

• Texas earthquakes on the decline - for the first time in 5 years, the number of earthquakes in the Texan Permian declined in 2023 after regulators implemented new restrictions on the underground disposal of wastewater by E&P players. A total of 194 quakes were recorded last year, a fall of 10%.

• Chevron warns of $4bn Q4 23 impairment - due to unfavorable regulation in California that has hit the value of its assets there and additional decommissioning liabilities in the GoM.

🏰 Europe

• Plenty of piped Russian gas still reaching Europe - in 2023, ~28 bcm of Russian gas flowed through pipes to Europe. While this is a 56% decline on 2022, and well off the pre-Ukraine war peak of ~180 bcm, the volumes are still significant and show just how hard it is for Europe to cut itself free from its once-largest gas supplier.

🦁 Africa

• Gabon’s military government scuppers M&P’s Carlyle deal - Maurel & Prom had been set to acquire Assala Energy from Carlyle for $730m, but the Gabonese government, which came to power four months ago in a coup, has said it will exercise its preemption rights to purchase Assala instead.

🗿 Central & South America

• India takes Venezuelan oil in lieu of debt - ONGC is to receive oil to help recoup a $600m dividend it’s owed from its part ownership in the San Cristobal project in eastern Venezuela. Western sanctions have so far prevented ONGC from receiving the dividend.

🌍 GEOPOLITICS & MACRO

• Hamas’ second-in-command taken out - an Israeli drone strike on an office in Beirut, Lebanon, has killed Hamas’s deputy chief and several other members of the terrorist organisation. The strike is the first targeted attack on Hamas members outside of Palestine since the Oct. 7th attacks and the powerful Lebanon-based Hezbollah militant group reacted by saying the attack “will not go without a response or punishment”.

• Maersk again suspends Red Sea shipping until “further notice” - the shipping giant clearly isn’t entirely convinced by the US and others’ plans to protect commercial vessels from the marauding Houthi skiffs.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Struggles at the world’s largest green hydrogen project - Sinopec’s flagship $420m solar-to-hydrogen project in China is only operating at 20% of its capacity due to various technical problems that it doesn’t expect to resolve until late 2025. Green-hydrogen is the process of obtaining hydrogen by separating it from water (H2O) using electricity generated from “renewable” power sources.

• Tesla bigger than Aramco and Apple combined - is what CEO Elon Musk believes is possible if the EV maker “executes” well over the next five years. Today, Tesla’s market cap is ~$780bn while Apple’s is $2.9tn, and Aramco’s $2.3tn. I wouldn’t usually bet against Musk but that seems ambitious, even by his standards.

🛢️ BOTTOM OF THE BARREL

As US oil and gas output hits new records, its worth zooming out and marveling at the momentous two decades the US energy sector has enjoyed.

Thanks to the shale revolution, the US is now the world’s preeminent energy superpower, bar none.

It’s hard to understate the impact this extraordinary energy renaissance has at home and around the globe.

Abundant cheap energy, especially natural gas, is fueling economic growth in the US that Europe can only dream of. The economic recession that wasn’t in 2023 was doubtless warded off, in large part, thanks to natural gas prices of less than $3/mmBtu.

Cheap energy means US manufacturers can compete in global markets. It means consumers and business have more cash in their pockets to spend on other things, including innovation and investment. It means US energy producers can take market share from international players.

Energy is the economy, and the US is swimming in riches of it.

From a geopolitical point of view, the US is no longer bound by the anxiety that comes with being heavily dependent on imports for energy needs.

Yes, it’s still very much part of the interconnected global energy market, but producing 35 mmboe/d of oil & gas gives you a swagger on the global stage that’s lacking when you’re vulnerable to the whims of Middle Eastern sheikhs.

Power is the inverse of dependence.

Historians will remember the first quarter of the 21st Century for the emergence of China, 9/11, the iPhone, and COVID.

But I’d argue the US shale revolution has a solid claim as the most significant global event since the turn of the millennium.

👋 BEFORE YOU GO 

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