5th October 2023

Good morning ladies and gents. Some highlights from today:

• 🤡 German “Greens” firing up coal. Again.

• 📉 Crude sell-off

• 😬 COP’s gonna be a trainwreck

plus barrels more. Let’s get to it…

📈 THE NUMBERS

Yesterday’s ~5% decline in crude prices was the largest daily fall in over a year, driven by negative economic sentiment and profit taking.

Oil equities followed crude downwards.

🗞️ WELL-HEADLINES

 🗽 North America

• Civitas acquires Vencer assets - Civitas Resources is buying a package of assets from Vencer Energy, a subsidiary of Vitol, in the Midland Basin of the Permian for $2.1 billion in cash and stock. The deal includes 44,000 net acres and 62 kboe/d of production (~50% oil).

• Suncor bags Total’s oilsands stake - the deal for Total’s 31.2% stake in the Fort Hills oilsands mining project in northern Alberta is worth $1.1 billion and includes 61 kb/d of production capacity and 675 mmbbls of reserves. The deal marks Total’s exit from Canadian oilsands.

• Canada’s solid oil growth - analysts expect Canada’s oil output to rise by ~375 kb/d over the next two years, in large part thanks to the new Trans Mountain pipeline that will unlock more export capacity. Today, Canada is the world’s 4th largest oil producer with output of ~ 4.4 mmb/d.

• Keystone outage - the major 600 kb/d pipeline that transports crude from Canada to the US was shut down temporarily yesterday for maintenance. It’s now operating at half capacity.

• US gasoline stocks shoot up - commercial crude inventories fell by 2.2 mmbbls last week, while gasoline stocks rose by a whopping 6.5 mmbbls to above their 5-year average.

🏰 Europe

• Unrest at Shell over climate plans - Shell’s CEO is holding a townhall, “A Conversation With Wael”, later this month with employees to address growing discontent in the company about its low carbon strategy. Some employees have voiced concerns about a recent shift to focus on shareholder returns and its core oil & gas business.

🕌 The Middle East

• Big $$$ contracts - ADNOC has handed out two huge EPC contracts to Saipem and Maire Tecnimont worth a combined $12.8bn for the development of the 1.5 bcf/d Hail and Ghasha Offshore Development. The project will include a CCS facility that aims to make it net-zero emissions.

⛩️ Asia & Oceania

• All eyes on Nahara - Petronas will any minute start drilling an appraisal well at its Nahara oil and gas discovery offshore Malaysia. Expectations are high: the company said the discovery in 2022 was its most significant oil find in a decade.

🦁 Africa

• Egypt E&P rights awarded - a JV between QatarEnergy, BP, and Eni, has been awarded the E&P rights for the Port Said Block in the Egyptian Med.

🗿 Central & South America

• T&T launches its latest offshore auction - Trinidad & Tobago’s latest round includes 13 blocks, twice as many as its last auction back in 2019. T&T has a 15 mtpa LNG facility but it’s been operating below capacity recently due to a lack of feed gas.

🌍 GEOPOLITICS & MACRO

• COP28’s gonna be a trainwreck - Russia has said it will oppose any deal to phase out hydrocarbons at the upcoming COP summit in Dubai (and they won’t be the only ones). The US and some EU countries are pushing for a deal that would set a specific timeline for winding down unabated fossil fuel use. Given current global geopolitical tensions and increased focus on energy security, I wouldn’t bet on any meaningful accord to emerge from the next chapter in the UN climate jamboree.

• OPEC+ staying the course - a brief meeting yesterday between OPEC+ big dogs confirmed that Saudi, Russia et al would maintain their respective crude output cuts until the end of the year, at least. No surprises there.

• Turkey warns of escalation against Kurds - the threat to attack Kurdish positions in Iraq and Syria follows a suicide bomb in Ankara on the weekend. Turkey specified that infrastructure and energy facilities would be targets. Turkey and Kurds have been fighting for decades in a deeply complex conflict over independence and rights.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• German “Greens” showing us how it’s done - for the second winter in a row, Germany will rely on dirty lignite coal plants to meet high power demand and avoid shortages. In April, Germany closed its last world-class, safe, zero-carbon nuclear plants. It’s hard to express just how clueless German energy policy is. These are not serious people, and the environment and German economy are paying the price.

• BP’s US biogas starts operations - BP has started production at its first biogas plant since its $4bn acquisition of Archaea last year. The plant captures gas from a nearby landfill site - greenhouse gas that would otherwise enter the atmosphere - and uses it to generate electricity and heat. The company is aiming to bring several more similar plants online this year.

🛢️ BOTTOM OF THE BARREL

Some numbers on Germany’s genius power strategy:

👋 BEFORE YOU GO 

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