Morning team - ready for the weekend? Over here in the UK we’ll be digging out the Factor 50, firing up the BBQs, and behaving badly for a final time this summer as we enjoy a welcome heatwave.

Anyway, 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:

• 🛑 Strikeout at Chevron’s Oz LNG

• 👋 More IOCs say 'adios' to Mexico

• ⚛️ Uranium demand going nuclear?

plus a lot more. Let’s get to it…

📈 The numbers

European gas prices have spiked on the news of strikes at Australian LNG facilities. Oil prices edge down on the day but are up for the week.

🗞️ Well-headlines

 🇺🇸 North America

• Chevron and Repsol are saying adios to E&P activities offshore Mexico. They join a long list of companies that have quit the country after disappointing results since a reform of Mexico’s O&G sector back in 2014 that attempted to reinvigorate the province by attracting foreign investment.

• Crescent Energy has acquired additional interests in its operated Western Eagle Ford assets for $250m from an unnamed seller. The interests include ~12 kboe/d of net production.

• US commercial crude inventories fell by 6.3 mmbbls (vs an expected 2.1 mmbbls decline). Meanwhile, gasoline stocks fell by 2.7 mmbbls (vs a 0.95 expected draw).

• Gasoline prices are spiking by as much as $1/gal in the US corn belt. Honestly, not sure sure why they’re climbing there specifically. Any ideas?

• Repsol has acquired US onshore wind company ConnectGen from Quantum Capital for $768m. ConnectGen has 20 GW in planned onshore wind, solar and energy storage projects that will help Repsol achieve its 2030 goal of 20 GW of low carbon capacity.

🇪🇺 Europe

• Spain’s energy minister has said that the EU has no short-term plans to ban Russian LNG imports. Piped gas from Russia to Europe has been reduced to almost zero but LNG imports have risen by 40% compared with before the invasion of Ukraine. Ultimately, energy security trumps all.

• Italian OFS Saipem has bagged two contracts worth a combined $850m in Italy and Ivory Coast. Saipem is on a hot streak having secured several other large contracts earlier in the year.

🇸🇦 The Middle East

• Kuwait’s state owned oil companies reported bumper profits of $8.9bn in 2022/23 thanks to high oil prices and the ramping up of the new mega Al-Zour refinery. KPC’s CEO commented that “the oil sector in Kuwait has made considerable achievements towards realizing the country’s ambitious oil strategy”.

🇨🇳 Asia

• JERA, one of the world’s largest buyers of LNG, doesn’t think outages at Chevron’s disrupted LNG facilities will have a large impact on gas prices due to high storage level and low demand. Let’s hope they’re right - we’ve all had enough of rising energy bills.

📍Everywhere else

• Talks between Chevron and unions at the Wheatstone and Gorgon LNG facilities in Australia have broken down. Strikes start today. It’s not yet clear what the impact on production will be from these two plants that supply ~5% of the world’s LNG.

• Ooops. Nigeria’s national oil company, NNPC, has said that Eni did not receive its consent to sell onshore assets to Oando, and is therefore in “a grave breach” of their JV terms. Eni denies the claims.

🌍 Geopolitics & macro

• Reports have emerged that earlier in the year the US seized 1 mmbbls of crude that were being smuggled to China from Iran, in defiance of sanctions. The Greek-owned ship had been hiding its location and falsifying records to try and evade US authorities. It’s not clear where those barrels ended up…

• In a speech in Europe, US climate clown John Kerry said that Europe shifting to wind and solar helps push back against Russia’s weaponisation of energy. What he failed to mention is that the wind, solar, and rare earth supply chains are entirely dominated by another “adversary”, China. There’s no such thing as “energy independence” and definitely not with wind and solar.

💨 Carbon, Climate & other energy stuff

• Demand for uranium for nuclear power reactors is expected to increase by 28% by 2030, and nearly double by 2040, according to a report from the World Nuclear Association. The bulk of this demand is expected to come from India and China.

• The US is expected to add a record 32 GW of solar capacity this year, and reach a total capacity of 375 GW by 2028 from 153 GW currently. China is set to add ~100 GW in 2023.

• European battery and minerals companies are calling for help from the EU in order to compete with China. In a joint letter to the EU Commission, 16 companies highlighted China’s dominance of the battery supply chain, and urged for more funding and policy support.

• The UK’s latest power capacity auction has failed to attract a single offshore wind bid. Developers have complained that rising costs have meant offshore wind projects are not economically viable at the maximum price offered in the auction. It feels like we’re writing about the global offshore wind industry’s troubles nearly everyday at the moment…

🛢️Bottom of the barrel

Saudi’s crude production cut extension will no doubt have pissed off a few suits in the White House who have been trying everything to keep oil prices lower and gas guzzling voters happier.

One lever the administration has been tugging hard on is the Strategic Petroleum Reserve (SPR). The SPR was set up in 1975 after the OPEC oil embargo to act as a safety net if oil supplies were ever cut off again.

It was never intended to be used as as a political tool but that’s exactly what’s happening today.

Biden and co have drained the SPR, and in doing so relinquished its purpose as an insurance policy, to levels last seen in 1983 to keep a lid on oil prices. It may have helped for a short while, but what now? Will the US dip into it again with oil prices still at $90/bbl and an election on the horizon? I certainly can’t see them filling it back up anytime soon…

I can’t vouch for the credibility of this but it’s interesting food for thought:

👋 Before you go

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