Good morning ladies and gents - this is Both Barrels. Your daily dose of all things oil, gas, and energy, without the hot air.

Here’s what hit the wires today:

• 🎉 Boom time for OFS

• 💡 Power of Siberia 2 progressing

• 🛠️ Germany’s industrial demise

plus a lot more. Here goes:

📈 The numbers

Oil prices holding their position around $90/bbl after large crude inventory draws and Saudi’s clear statement of intent earlier in the week.

🗞️ Well-headlines

 🇺🇸 North America

• SLB, the world’s largest OFS company, is enjoying a prosperous year, adding an extra $5bn to revenue expectations, according to the CEO. Next year is expected to be strong too, largely driven by a pick-up in demand for international offshore drilling, especially in the Middle East.

• Texas’s power grid entered emergency operations yesterday, and ERCOT again urged consumers to conserve power use, in an attempt to avoid outages amid low wind output. At 6pm CT yesterday evening, wind was providing just 7% of power generation, while natural gas was contributing 60%.

• The US government, citing environmental reasons, has cancelled seven drilling leases in Alaska that were controversially awarded by the Trump administration. The government is also banning new leasing on ~10 million acres in the National Petroleum Reserve in Alaska.

• The API reported a 5.5 mmbbls draw in US crude inventories last week (compared with an expected decline of 1.4 mmbbls). Gasoline inventories also fell significantly by 5.1 mmbbls.

• Peyto is buying Repsol’s Canadian assets for $468m. The portfolio includes upstream oil and gas assets with production of 23 kboe/d, and related midstream facilities and infrastructure in the Deep Basin in the province of Alberta.

🇪🇺 Europe

• Rystad Energy has released an optimistic report about the Norwegian North Sea. Investments are set to reach record highs this year, which could help push production back up from ~3.9 mmboe/d today to 4.6 mmboe/d by the mid 2020s. The UK North Sea isn’t faring so well…but let’s not talk about that.

• Shell is looking for buyers for Sonnen, the German battery company, that it bought in 2019 for ~€500m. The company is supposedly worth about €1.5bn today. Not a bad return, to be fair.

🇸🇦 The Middle East

• ADNOC has agreed a $550m LNG supply deal with PetroChina. The volumes and timeframes weren’t disclosed. ADNOC has signed a spate of similar deals recently with the likes of Japex, Total, and India Oil Corporation.

🇨🇳 Asia

• India is after more short term natural gas and has asked power plant operators to expedite any maintenance as the country tries to avoid power shortages. Surging power demand and low hydro and wind output is creating a shortfall.

• Russia has nearly finalized the route for its giant 50 bcmpa Power of Siberia 2 gas pipeline from the Yamal peninsula to China. Gazprom is targeting 2030 for first gas, although terms haven’t yet been agreed. The Power of Siberia 1 pipeline is currently delivering ~22 bcmpa to China, and a 10 bcmpa PoS 3 is also underdevelopment. Russia is keen to reroute its vast Siberian gas resources to Asia after loosing its key European market following the invasion of Ukraine.

📍Everywhere else

• The Chevron Australia LNG saga continues. Workers were due to start striking today at the giant Wheatstone and Gorgon LNG facilities (which combined supply ~5% of global LNG) but have agreed last minute to delay by 24 hours as negotiations continue.

• Shell decided not to take its giant Prelude FLNG facility offline for a year to conduct repairs, instead opting for a quicker 2 month fix, so that it wouldn’t miss out on high gas demand. Prelude, the largest floating structure ever built at a cost of ~$12 billion, has suffered various technical issues since coming online in 2019.

🌍 Geopolitics & macro

• China’s exports are down 8.8% in August, compared with last year, according to official figures. However, the results are a bit better than expected, and an improvement on the 14.5% decline in July. China’s economy has been struggling with a real estate crash and weak consumer spending.

• German industrial output weakened again in July, with energy-intensive industries nearing the lows of last year’s energy crisis, which itself was below the Covid nadir. Germany’s once famous industrial sector is on its knees after decades of destructive energy policy that has promoted “green” over reliability and affordability. These are the consequences.

💨 Carbon, Climate & other energy stuff

• Another day, another blow for the offshore wind industry. Vattenfall has said that it is reviewing its other planned projects offshore UK after abandoning the 1.4 GW Norfolk Boreas project earlier this year due to rising costs. Rising interest rates, increasing raw materials costs, and poor turbine performances, are putting offshore wind projects around the world well out-of-the-money.

• France’s nuclear fleet is in a much stronger position than it was last year as Europe heads into winter. Many of its reactors were offline due to technical faults in 2022, compounding the energy crisis caused by a lack of Russian gas. Most of the reactors have since been repaired, raising hopes of a more calm energy winter on the continent.

• Your next holiday may be a little more expensive. Several US airlines have warned that rising crude prices are beginning to feed through into higher jet fuel costs, which will no doubt end up in higher air fares for you and I.

🛢️Bottom of the barrel

👋 Before you go

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