4th December 2023

Venezuela on edge | Brazilā€™s confused OPEC stance | Nuclearā€™s big break | More danger on the Red Sea

Happy Monday Both Barrels crew.

Hereā€™s what hit the wires over the weekend in all things oil, gas, and energy:

  • šŸ‘€ Venezuela on edge

  • šŸ¤” Brazilā€™s confused OPEC stance

  • āš›ļø Nuclearā€™s big break

  • šŸŒŠ More danger on the Red Sea

  • āž• plus US rig count climbing; bickering at COP; coal rescues Europe from cold snap.

Letā€™s go.

šŸ“ˆ THE NUMBERS

As of 04:55 ET on 04/12/2023. N.B. prices for JKM LNG and uranium can be delayed by a day or two.

šŸ—žļø WELL-HEADLINES

 šŸ—½ North America

  • Oil rig count climbs - the US fleet increased by 5 rigs last week to 505, with most of the additions in the Permian. The count is still well below the 627 a year ago but the recent uptick over the past few weeks may alarm oil bulls at a time when US output is already surging to record highs.

šŸ° Europe

  • Equinor and OKEA in dispute over Statfjord deal - in March, OKEA agreed to acquire a 28% stake in the asset for $220m but has told Equinor that completion will be postponed as it says the field has less reserves and higher costs than previously thought.

  • Struggling Petrofac shedding assets - the company plans to sell non-core assets and warned cashflow for the year will disappoint. Its share price fell by 8% to a new record low.

  • Shareholders approve TGS / PGS merger - the combination of the two geophysical heavyweights will create a company worth ~$2.5bn.

šŸ•Œ The Middle East

  • Al-Zour fully operational - all facilities at the mega new 615 kb/d refinery in Kuwait are up and running. Output will now gradually ramp up to full capacity.

  • Fire injures 14 at Kuwaitā€™s Al Shuala oil facility - the blaze is under control and did not impact operations.

ā›©ļø Asia & Oceania

  • Final nail in the coffin for Brookfieldā€™s Origin bid - Origin investors voted against Brookfieldā€™s latest ~$10.6bn bid. The market thinks Brookfield will now walk away: Originā€™s share price is at a nine-month low.

  • Jadestoneā€™s strong drilling campaign in Malaysia - the company has said that its four well campaign at the offshore East Belumt field was ā€œvery successful, significantly exceeding our pre-drill expectationsā€.

šŸŒ GEOPOLITICS & MACRO

  • Venezuela on edge - in a controversial referendum, Venezuela has voted in favour to annex the oil-rich Esequibo territory of Guyana. There are concerns Venezuela may be preparing to invade Guyana to follow through on the outcome of the vote. Meanwhile, the US has said itā€™s ready to ā€œpauseā€ sanctions relief unless Venezuela makes further progress in releasing political prisoners in the next few days.

  • More Red Sea ship attacks - three more commercial Israeli vessels came under attack from Houthi missiles and drones in the Red Sea. A US warship came to their rescue and reportedly shot down other drones. Iranian-backed militants coming into very close contact with the US navy in one of the worldā€™s most important shipping lanes is a dicey situation to say the least.

  • Brazilā€™s strange OPEC stance - President Lula has said the country ā€œwill never be a full member of OPEC [and wonā€™t have a production quota], because we don't want to be. What we want is to influence." He added that Brazilā€™s objective was ā€œto convince the countries that produce oil that they need to prepare for the end of fossil fuelsā€. Says the country that just announced $100bn of investments into upstream expansionā€¦

ā€œMost of your country is actually oursā€¦ā€

šŸ’Ø CARBON, CLIMATE, & OTHER ENERGY STUFF

  • Nuclearā€™s big break - after being overlooked for decades, 2023 is the year COP finally starts taking nuclear seriously. Over 20 countries including the US, Canada, Japan, France, and the UK have pledged to triple nuclear capacity by 2050.

  • Bickering begins at COP - in a heated live event, the UAEā€™s President of COP said ā€œplease help me, show me the roadmap for a phase-out of fossil fuel that will allow for sustainable socioeconomic development, unless you want to take the world back into cavesā€¦.There is no science out there, or no scenario out there, that says that the phase-out of fossil fuel is whatā€™s going to achieve 1.5C.ā€ Needless to say, those final comments ruffled a few feathersā€¦

  • Oil firms join decarbonisation charter - companies representing over 40% of global oil output have agreed to strive for net-zero operations by 2050, end routine flaring by 2030, and minimize upstream methane emissions. The agreement is the first time that several NOCs have made net-zero commitments.

  • Bill Gates says world unlikely to keep warming below 2C - itā€™s interesting that public figures are finally saying what has been obvious for a while. Thereā€™s no chance CO2 emissions will fall in line with sub 2C warming scenarios. Weā€™re going to run the climate change experimentā€¦

Vive Les Nukes | French President Macro called nuclear an ā€œindispensable solutionā€

šŸ›¢ļø BOTTOM OF THE BARREL

What do you get when you mix ideological energy policy and almost no windā€¦

The wind took the weekend off. The Germans have a word for this lull: ā€œdunkelflautenā€

ā€¦with subzero temperatures?

Many parts of Europe are blanketed in snow. | Munich yesterday.

One of the dirtiest coal-powered grids in the world:

Coal is keeping the lights on in Germany | Source: Electricity Maps

This is the inevitable consequence of trying to power modern economies on intermittent, weather-dependent energy sources.

Because when faced with a choice between keeping the lights on and preserving the environment, the former will always triumph.

If you want sustainability, you must first ensure reliability and affordability.

šŸ‘‹ BEFORE YOU GO 

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Thanks for reading. Have a day out there. šŸ›¢ļøšŸ›¢ļø