7th August 2024

What’s cooking? Here’s all you need to know this morning in oil, gas, and energy:

• 🫨 “The market is overreacting”

• 🤑 Aramco makes $320m a day

• ❌ Big blow to Browse

• 🚼 Warlord’s scorned son shuts Libyan field

• ➕ plus support for Brent at $75?; Petrobras’ “super manager”; Equatorial Guinea cosies up to Trafi; US gas output leveling off; SunPower bankrupt; German EV sales sinking.

Let’s dive in…

📈 THE NUMBERS

The chaos in markets has mercifully eased off - for now - and oil prices have stabilized.

Some of that price support is coming from the threat of an Israel / Iran showdown though...

🗞️ WELL-HEADLINES

 🗽 North America

• EIA revises down US gas output - rock bottom gas prices continue to feed through into reduced output, and the EIA now forecasts average 2024 gas production at 103.3 bcf/d. This compares with 103.8 bcf/d last year, and 103.5 bcf/d forecast in July’s report.

• NextDecade shares down 20% as court revokes Rio Grande LNG permit - the environmental ruling effects train four at the long delayed $18bn 17.5 mtpa project in Texas.

• Cheniere signs LNG supply deal with Galp - the agreement will last for 20 years from sometime in the early 2030s and involves 0.5 mtpa from the yet-to-be-approved Sabine Pass Liquefaction Expansion Project.

• Some earnings highlights - Devon beats estimates and declares dividend; Marathon shares jump 6% as high throughput drives out-performance; Suncor tops estimates on strong output.

🏰 Europe

• "Why should we wean ourselves off Russian oil, exactly?" - the CEO of Hungary’s MOL says the country’s security of supply is dependent on Russian crude imports. Hungary relies on Russia for a third of its total oil imports which feed its refineries.

🕌 The Middle East

• Aramco maintains $31.1bn dividend - the Saudi giant recorded profits of ~$29bn in Q2 2024 (that’s a cool $320m every single day) and kept its generous dividend stable. Dividends to the Saudi government are a key source of income to help fund Crown Prince MBS’s ambitious and eye-wateringly expensive Vision 2030.

• Osaka gas signs supply deal with Ruwais LNG - the Japanese utility will buy 0.8 mtpa from ADNOC’s LNG facility in the UAE which is due to start production in 2028.

⛩️ Asia & Oceania

• Major setback for Woodside’s Browse - the huge $30bn gas project offshore Australia is up in the air after Australia’s Environmental Protection Agency said the development plans were "unacceptable". The concerns are related to the project’s potential impact on migrating pygmy blue whales, and a local sea turtle population, that congregate around a nearby reef.

• Total offloads Pakistan oil marketing biz to Gunvor - the French major owned a 50% stake in the Total PARCO JV which has a retail network of more than 800 service stations and is involved in fuel logistics and lubricants.

• New man in charge at MISC - former Shell veteran, Zahid Osman, has become the CEO of the Malaysian FPSO player, which is one of the largest vessel owners in the world.

🦁 Africa

• Mixed messages from Libya - some reports suggest that output from Libya’s largest oilfield has been shut down entirely from its usual rate of 300 kb/d, while others suggest it is down by ~100 kb/d. Rumours are that the son of Libyan warlord General Haftar ordered the shutdown in response to an arrest warrant issued against him from Spain. Yeh, I don’t really get it either.

• Equatorial Guinea getting into bed with Trafi - the commodity trader is apparently in talks to provide the country a $2bn loan to develop its hydrocarbon sector. In return, Trafigura will presumably get access to the country’s oil supply and profit by selling it in global markets. Traders are putting their cash mountains to good use…

🗿 Central & South America

• Petrobras’ “super manager” - the Brazilian NOC has created the role which is tasked with boosting capital expenditure. The government sees Petrobras as key driver of job creation and economic activity but investment has been hindered by environmental and supply chain hurdles. I’m sure I can help you spend some of that cash…

• Promising gas discovery offshore Colombia - Petrobras and Ecopetrol said the new discovery at the Uchuva prospect could justify a large development. Much of the region is a net gas importer so local discoveries are very welcome.

🌍 GEOPOLITICS & MACRO

• “The market is overreacting” - Aramco’s CEO said that oil demand is growing by ~2 mmb/d this year, and “the fundamentals do not support the drop in prices that we are witnessing”. He pointed to strong US gasoline consumption, governments refilling strategic reserves, and a recovery in Chinese demand as key drivers of growth.

• Goldman sees Brent support at $75/bbl - the bank thinks that the risk of a recession is low and that oil demand remains strong around the world. Goldman’s has a Brent price range of $75-$90/bbl.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Germany EV sales fall by 36% - Europe’s largest car market removed EV subsidies at the end of 2023 and sales are slumping. The 36% decline is over the past year. Remove the bribes and consumers don’t want to buy the things. Better products will always win out in the end and EVs are still inferior to ICEs.

• SunPower, former solar heavyweight, files for bankruptcy - the US solar company was valued at $12bn in 2021 but is now worth just ~$75m after rising interest rates wrecked its business model. Like NFTs and ultra fast delivery services, renewables were a low interest rate phenomenon. Now that rates have normalised, everyone is realizing the emperor has no clothes and renewable developers across the globe are going under.

🛢️ BOTTOM OF THE BARREL

Chernobyl claimed a lot of lives, but not in the way you might think…

👋 BEFORE YOU GO 

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

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