5th December 2023

Good morning team.

Here’s Both Barrels with your daily dose of all things oil, gas, and energy:

• 🤡 Kerry’s climate colonialism

• 👀 Exxon’s nervous eye on Guyana

• ❌ Saudi rejects hydrocarbon phase out

• ⏬ Downwards pressure on US gas prices

• ➕ plus Gail sues Gazprom; Red Sea insurance costs are climbing; long awaited deal at Atlantic LNG.

Let’s take a look.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Record output and mild weather weighing on gas prices - US natural gas futures fell by 5% yesterday to $2.67/mmBtu. Prices are expected to stay low thanks to high storage levels. Unless you’re a gas investor, count yourself lucky: those of us over here in Europe pay ~5x more for our gas…

• 2024 looking good for energy infrastructure players - Kinder Morgan, which operates ~ 82,000 miles of pipelines in North America, expects strong gas market fundamentals to drive earnings growth next year. Increased US energy output and exports are fueling solid demand for O&G transportation.

• Phillips defends its board - after activist investor Elliot took a $1bn stake in the company and called for a board reshuffle to turn the company around, P66 has pushed back saying it has the right leadership in place.

🏰 Europe

• Shell’s North Sea drilling plans - the major is targeting next year to drill wells at its promising Selene and Pensaola prospects in the UK. The Pensacola discovery is one of the most exciting Southern North Sea discoveries in recent years, according to Shell’s partner, Deltic.

• Engie wins 130m court battle - the French energy company has won its court case against Luxembourg over the payment of back taxes.

🕌 The Middle East

• Maha Energy exits Block 70 in Oman - it has sold its 65% stake in the onshore O&G project to Mafraq Energy.

⛩️ Asia & Oceania

• Gail is after Gazprom for $1.82bn - the Indian NOC has filed a lawsuit against Gazprom (Sefe) for failing to supply it with LNG cargoes under a long term contract. Sefe stopped delivering LNG to Gail in 2022 to meet other demand, but resumed supplies in April 2023.

• Pertamina and Karpowership partnering up - the two firms have agreed to work together to develop energy infrastructure across Indonesia. Karpowership, a Turkish company, is best known for its floating gas power stations.

• Lion Energy looking for East Seram partners - the Australian indy wants to farm down part of its 60% stake in the promising East Seram PSC in Indonesia.

🦁 Africa

• Nigeria to revoke unused leases - of the 53 exploration leases that have been issued to oil companies since 2003, 33 have gone unused and the regulator is no longer willing to let the companies hold on to them indefinitely. Nigeria is on a drive to encourage more O&G investment.

🗿 Central & South America

• Exxon CEO on the Venezuela / Guyana dispute - “I’m not sure the press has captured the true intensity of the situation there, but we’re keeping an eye on it…We can do what we can do, which is making sure that we’re helping the government of Guyana by producing the resources efficiently.” He also said that Exxon wasn’t supporting the Guyanese government financially in the dispute. Guyana is one of the jewels in Exxon’s crown so they’ll be a little nervous right now…

• Atlantic LNG’s restructuring - in an agreement signed this week to end five years of talks, Shell will reduce its ownership in the Trinidad and Tobago project, while BP and NGC’s stakes will increase. The 15 mtpa facility has been running at about 50% capacity due to a lack of feed gas and the government hopes the new agreement can revive the project’s fortunes.

🌍 GEOPOLITICS & MACRO

• US ready to reimpose sanctions on Venezuela - no decisions have been made by the White House to impose sanctions in the wake of Venezuela’s referendum to annex most of Guyana, but a gov’t spokesperson said Caracas has not yet carried out its part of the sanctions bargain and measures will be slapped back on if the agreement is not fulfilled.

• Putin’s rare trip abroad - the Russian president, who has barely traveled in recent years thanks his COVID paranoia and becoming an international pariah after invading Ukraine, is paying a visit to the UAE and Saudi this week. Presumably he’s going to try and drum up some support as his list of friends shrinks.

• Houthi attacks push up insurance costs - the cost of insuring commercial vessels passing through the Red Sea has increased by 2-3x since Monday following several attacks on vessels by Houthi militants. Ships must either pay the higher costs or take a much longer route around to avoid the danger zone. Either way, shipping costs are going up.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• “Absolutely not” - was the response from Saudi’s Energy Minister when asked if Saudi would agree to a COP accord that calls for the phase down of fossil fuels. Any final text must be agreed unanimously by the 197 states involved and several EU countries as well as the US are pushing for a hydrocarbon phase out. Expect a fiery COP showdown in the coming week.

• Kerry calls for some climate colonialism - the US climate chief, who presumably arrived at COP on a PJ, has said that no new coal plants should be permitted anywhere in the world. Meanwhile, coal still accounts for 20% of US power generation. So poorer countries aren’t allowed to develop on cheap hydrocarbons but it’s OK for the US to keep doing so? Hmmmm.

• Aramco calls for more hydrocarbon investment - while most at COP are clamoring for a phase out, the CEO of the world’s largest company is saying it how it is: “you need that investment to meet the call on our production and at the same time manage the decline in existing fields.”

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO 

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