6th September 2024

Happy Friday ladies and gents. Here’s what hit the wires today in the world’s most underappreciated industry:

• ⁉️ To pump or not to pump

• ⬆️ Chevron leveling up in GoM

• 😬 Russia shipping LNG to…storage

• 🤷 A global refining crunch?

• ➕ plus crude stocks tumble; a lifeline for South Sudan; protests in Colombia; Putin’s trolling; Venture’s dodgy $3.5bn; Volvo writes off EV target; salt and CO2; and plenty more.

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📈 THE NUMBERS

OPEC+ delays new volumes, US inventories tumble, aaaaaand the market shrugs, crude still falls.

Decisions like this are Catch-22 for OPEC: pump more volumes and prices go down. Or, hold back the volumes and admit to everyone that the fundamentals aren’t as strong as you’d hoped. Prices go down.

🗞️ WELL-HEADLINES

 🗽 North America

• Chevron leveling up in the GoM - the major expects to add 175 mmboe of recoverable reserves at its St. Malo field through a water injection facility and new wells. Chevron has also started injecting water into its Tahiti field as it looks to tap more barrels in existing core assets.

• A big tumble in US crude inventories - stocks fell by 6.9 mmbbls last week, to a year-low, vs expectations of a 1 mmbbls decline. Gasoline stocks, meanwhile, climbed slightly by 0.8 mmbbls vs a predicted 0.7 mmbbls draw.

• Venture Global’s wrongful $3.5bn - in the latest chapter of the ongoing spat, Shell has claimed the LNG developer made $3.5bn in additional profit by selling LNG from its Calcasieu Pass facility (the construction of which Shell helped fund) on the open market during the energy crisis in 2022 rather than selling the cargoes to Shell as was apparently contracted.

• Nat gas producers still holding back - various gas E&Ps, including Chesapeake and Coterra, have confirmed they’ll keep choking production as gas prices remain low. “I’d be surprised if we see the magnitude of volumes curtailed this fall that we saw in the spring, but it wouldn’t shock me”, said Chesapeake CEO Nick Dell’Osso.

• Talos hits pay in GoM - the Ewing Bank 953 well struck an estimated 15-25 mmboe of resources, with an initial production rate of 8-10 kboe/d.

• Equinor strikes out with Sitka wildcat - the “very high risk” well offshore Canada in Newfoundland & Labrador hit hydrocarbons but too little to be commercial.

🏰 Europe

• Russia shipping LNG to…storage - as sanctions-wary buyers stay away, satellite images are showing that Russia is shipping LNG from its newly-opened flagship Arctic LNG project into floating storage units in Russian and across Europe. That wasn’t part of the plan. Meanwhile the US has sanctioned more LNG tankers suspected of carrying Russian gas.

🕌 The Middle East

• All quiet in this hydrocarbon hotspot…

⛩️ Asia & Oceania

• Transocean lands Indian contract - the struggling offshore OFS has landed a contract offshore India worth $123m. Its Dhirubhai Deepwater KG1 has been leased by Reliance for at least 300 days, starting in 2026.

• China’s offshore fracking vessel - The Hai Yang Shi You 696 is described by CNOOC as China's first and the world's largest offshore fracking unit, and is set to begin operations tapping into the country’s offshore shale and low-permeability reserves

🦁 Africa

• Egypt’s struggles - despite large gas reserves in its waters, Egypt is set to become a net importer of gas as its domestic production rapidly declines. The country is looking to buy 20 cargoes of LNG for the winter, marking the first time it has needed to import gas for the winter months since 2018.

• A new life/pipe-line for South Sudan - the landlocked African oil producer is in talks with China to build a new export pipeline to the coast via Ethiopia and Djibouti. Currently it’s entirely reliant on its war-torn neighbor, Sudan, for oil export passage.

• Exploring frontiers in Zimbabwe - Invictus Energy is about to kick off an exploration campaign in Zimbabwe’s promising Cabora Bassa basin that it estimates could hold 1.1 tcf of recoverable gas.

🗿 Central & South America

• Strikes threaten Colombia oil output - truckers across the country have blocked major roads in protest against a rise in diesel prices after a subsidy was removed. EcoPetrol has said it has started shutting in wells as a result of the disruption .

🌍 GEOPOLITICS & MACRO

• To pump or not to pump - in a surprise to precisely no one, OPEC+ is delaying its production cut unwinds that were due to start in October but only by a mere two months. The plan is now to bring back 180 kb/d in December and ~2.2 mmb/d over the course of a year. But with Brent flirting with a “6” handle, an extra couple of months might not save the fragile market from a tailspin. And OPEC know it. I wouldn’t be surprised if the unwinds get pushed back further into 2025.

• Putin’s trolling - with a wry smile, the Russian president said he’d prefer Harris to win the US election because of her “infectious” laugh. Sure, Vlad. Sure.

• Refinery crunch incoming? - the CEO of Phillips 66 has warned that a global shortage in refining capacity could emerge as soon as next year as tightening refining margins are forcing capacity shutdowns. 700 kb/d of capacity could be retired, he suggested.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Volvo writes off EV target - the European car giant, which has been a big advocate for EVs, has scrapped its target of selling all EVs by 2030. The company is now targeting 90-100% of hybrids and EVs. EV targets (which were all arbitrary and baseless in the first place) are in reverse across the sector as manufacturers realize consumers aren’t too keen on paying more for an inferior product with limited supporting infrastructure.

• ADNOC takes stake in Exxon’s mega Texas hydrogen plant - the facility, if built, will be the world’s largest of its kind, producing hydrogen from methane (by splitting the H from the CH₄ (methane) and then storing the resulting CO2).

• Using salt to capture CO2 - Shell and Eni have invested in a start up called Mantel Capture which is trying to use molten salt to capture CO2 emitted from refineries, factories and other industrial sites.

• Qatar announces 2GW solar plant - the giant project is set to start operations in 2030, by which time the country’s solar capacity is due to be 4GW. As readers may have gathered, I think solar and wind are expensive mistakes (and that’s putting it kindly), but if you’re going to build solar anywhere then you may as well do it in the sun scorched deserts of the Middle East.

• A $7.3bn grant for rural US renewables - as part of the IRA, the government is providing the funding to 16 new projects run by rural electric cooperatives across America.

🛢️ BOTTOM OF THE BARREL

Well worth a quick watch (click to do so) 🤣🤣🤣🤣

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

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