6th October 2023

Good morning crew. Trust you’re all set for a top weekend. Here’s what hit the wires today:

• 🤑 Exxon’s $60bn Pioneer bet

• ❄️ Europe’s winter prayers

• 🖕 Putin’s gas taunt

• 🎨 Van Gogh’s pumpjack

plus a lot more. Let’s get to it…

📈 THE NUMBERS

Oil prices have fallen again to mark their sharpest weekly decline since March.

🗞️ WELL-HEADLINES

 🗽 North America

• Exxon close to $60bn Pioneer acquisition - the rumoured deal is expected to be announced in the coming days and would mark Exxon’s most significant move since its mega-merger with Mobil back in 1998. Pioneer, which currently produces ~700 kboe/d, holds one of the largest and most productive oil portfolios in the US, with its key assets in the Permian basin. Exxon is flush with cash and enjoying a high share price thanks to the current high oil price environment.

• Driftwood’s 3 year delay - Tellurian has asked the gov’t for a 36-month extension to complete the construction of its 27.5 mtpa Driftwood LNG project in Louisiana. It was originally due onstream in 2026 but the company has still yet to secure all the financing for the project.

🏰 Europe

• Nord Stream 2 ain’t dead yet - in what feels like taunt to Europe ahead of winter, Putin has commented that Russia could still provide gas to Europe via Nord Stream 2 as only one of the two pipes was destroyed by the explosion last year.

• Borrow my money, buy my crude - Russia’s Lukoil is lending $1.5bn to Socar for its 200 kb/d STAR refinery in Turkey. As part of the deal, Lukoil will sell oil to the refinery which had previously halted the purchase of Russian crude due to Western sanctions.

• That didn’t take long - Russia has lifted most of the restrictions on fuel exports. Diesel exports via pipelines and ports, which make up the lion’s share of the country’s fuel exports, are now allowed so long as the producer supplies 50% of the output to domestic markets.

• Tommeliten A’s time - Conoco is set to start production this month at the Norwegian offshore gas field. The field was originally discovered way back in 1977.

🕌 The Middle East

• Iran adds to its reserves - Iran’s energy minister announced the discovery of four new oil & gas fields with combined reserves of 2.1 bnboe. The fields were discovered over the past 2 years in various parts of the country. There’s still a lot left to be discovered out there…

⛩️ Asia & Oceania

• Chevron LNG, here we go again - workers at Chevron’s Gorgon and Wheatstone Australian LNG facilities (~5% of global LNG supply) are striking again after accusing Chevron of reneging on a deal mediated by the government in September.

• Vietnam’s long wait - Vietnam expects further years’ delays to its plans to develop its gas power infrastructure and various offshore gas fields in the South China Sea. Exxon, the operator of one of these offshore projects, has been trying to exit it for years.

• “Fastest offshore oil development ever achieved” - Thailand is due to start operations at its offshore 12 kb/d Rossukon oilfield just 6 months after development begun.

🌍 GEOPOLITICS & MACRO

• Rystad’s bearish crude outlook - the energy data firm believes that crude prices will fall to $60/bbl by 2026 as oil demand growth peaks and “ample supply” persists. The company also predicts that US oil production will climb to 15 mmb/d by 2026, up from ~13 mmb/d today. The bearish outlook marks a break from recent warnings about $150/bbl oil. The takeaway? No one really knows.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Europe’s winter prayers - "We don't have any buffer in the gas system…If there is very cold winter or supply disruptions it can lead to very critical situations” These are the words of German utility RWE’s CEO and demonstrate just how vulnerable Europe has become. The once mighty continent is crossing its fingers and hoping the gods bless it with a mild winter. Pray for us.

• EU solar can’t compete - EU solar execs have said that “Europe isn't profitable” for manufacturers and that China will continue to dominate the supply chain. This is news to no one and, ironically, one of the reasons cited: high energy costs. Solar PV manufacturing is extremely energy intensive and China does it using cheap coal power, while Europe forces its own power prices higher with intermittent wind and solar generation.

• US states stepping in to save wind - Massachusetts, Rhode Island and Connecticut are joining forces in an attempt to support the ailing US offshore wind industry. The states will jointly purchase wind power from new developments and are seeking 6,000 MW of capacity. Presumably they’ll be promising to pay well above market rates for this power and the taxpayer will ultimately pick up the bill.

• Can’t make it up - a ship named “Climate Justice” just loaded up with a cargo of coal in Vancouver. Yes, really.

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO 

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