9th July 2024

Good morning crew. This is Both Barrels and it feels great to be back. We’d missed ya. Here’s what hit the wires today:

• 🤞 Texas surveys the damage

• 😓 Europe’s refining struggles

• 💨 The superpower of aircon

• 🚗 EV buyers remorse

• ➕ plus Eni hits pay in Mexico; dust waves in the Red Sea; Modi in Moscow; US falling well short of wind targets; a good year for hydro.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Beryl, assessing the damage: after making landfall in Texas with wind speeds of up to 129 kph, the worst of Hurricane Beryl (since downgraded to a tropical storm) has now passed. The full impact on the energy sector is not yet clear, and while various ports, refineries, and platforms were ramped down or closed, it appears that most were fortunately spared the burnt of the storm. Meanwhile up to 2.7 million homes were without power yesterday. And breathe…

🏰 Europe

• BP warns of +$1bn writedown on German refinery - higher costs and increasing competition from fuel imports from the Middle East and Asia are hammering European refining margins. The old continent’s deindustrialization is in full swing…

• Europe ponders plans for seized Russian oil assets - Rosneft owns stakes in three refineries in Germany which will probably be sold. Germany has insisted the facilities will not end up back under Russian control.

• MET signs LNG supply contract with Shell - the Swiss trader has secured a 10-year supply contract with the volumes coming from the US.

🕌 The Middle East

• Dust storm over the Red Sea - a wave of dust is spreading over the Red Sea. This is apparently common at this time of the year due to wind directions that carry dust from Sudan. It’s not clear if any shipping has been disrupted but I’d guess the crews probably prefer this to Houthis with AK-47s.

⛩️ Asia & Oceania

• First gas from Malaysia’s Jerun field - SapuraOMV’s flagship offshore project will supply gas to the Petronas LNG facility. The field is set to produce up to 550 mmcf/d.

• China secures LNG supply from Glencore - Shenzhen Energy has signed a long-term LNG supply deal with the commodities trader, but no details were disclosed. China is the world's top LNG importer, buying 71.2 mtpa of the fuel last year.

🦁 Africa

• Tribunal rejects Eni/Vitol’s $7bn case against Ghana - Eni and Vitol had been seeking $7bn, later reduced to $915m, from the Ghanaian government, over the unitisation of an offshore oilfield.

🗿 Central & South America

• Eni strikes it lucky in Mexico - the company’s Yopaat-1 exploration well has discovered an estimated 300-400 mmboe of oil and gas in place at Block 9 in the Sureste Basin, offshore Mexico. Eni has had a string of exploration successes in the region and is considering a potential future 'hub' development.

🌍 GEOPOLITICS & MACRO

• Modi in Moscow - India’s PM, hot off a successful re-election for a third term, is in Russia to cosy up to Putin. India is managing a delicate balancing act as it attempts to stay in good graces with Russia, a key supplier of cheap energy and weapons, without irking the US.

• Recovering hydro set to taper coal and gas demand - 2023 saw unusually low levels of hydro power generation following reduced rainfall in India and China, which turned to coal and gas to plug the gap. Hydro output has recovered sharply so far in 2024, meaning that coal and gas demand growth may not be as strong this year as it was last.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Nearly half of EV owners regret their purchase - a study by McKinsey found that 46% of US electric vehicle owners want to switch back to internal combustion engines. Charging infrastructure, total costs of ownership, and impacts on long-distance trips were the main reasons cited. I recently rented an EV while on a trip to rural southern France. There wasn’t a charge point for miles and I crawled into my destination with 5% battery. Never again.

• US to fall far short of offshore wind targets - The American Clean Power Association projects there will be ~14 GW of offshore wind capacity along U.S. coastlines by 2030. That compares with a goal of 30 GW that President Biden laid out in 2021. What a crying shame that is.

• Germany’s grid needs $325bn in investment - if it wants to decarbonise its power supply. That sounds like quite a lot of cash to me. Who coughs up for that? The bill payers do.

• SSE pressing ahead with giant 2GW wind farm - while other developers curtail offshore wind plans because they don’t make any money without obscene subsidies, SSE and its partners confirmed they are cracking on with the Alpha project, offshore Netherlands, which will be the largest in the North Sea.

🛢️ BOTTOM OF THE BARREL

What are the keys to economic prosperity? Resources? Entrepreneurial spirit? Strong institutions?

Singapore’s late founding father, Lee Kuan Yew, who orchestrated a 100-fold increase in per capita GDP between 1960 and 2011, has an unusual theory. Air conditioning.

As you’ll probably know from your monthly utility bills, aircon has one hell of a power appetite. There’s plenty of talk about energy needed for AI, but what about energy needed for aircon in developing Asia and Africa?

👋 BEFORE YOU GO 

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Thanks for reading. Go get ‘em. 🛢️🛢️