9th January 2024

Rise and shine. Here’s all you need to know today in oil, gas, and energy:

• 🇳🇱 Groningen’s back, baby

• ⏬ Oil falls as Saudi cuts selling prices

• 👦 Wooing Gen Z into O&G

• ⚖️ Balancing Saudi’s bloated budget

• ➕ plus tightening offshore rig market; Microsoft’s big bet on solar; Statkraft’s $6.6bn investments; a landmark carbon credit deal.

Have a good one.

📈 THE NUMBERS

Oil prices dropped 3% yesterday before stabilizing this morning after Saudi’s large oil price cut spooked the market.

🗞️ WELL-HEADLINES

 🗽 North America

• Tempting Gen Z into O&G careers - US shale legend Harold Hamm is spearheading efforts to attract more young people to join the sector as enrollments into petroleum engineering courses decline sharply amid a taboo around oil & gas. “We are going to be using oil for the next 50 years and ‘clean burning’ natural gas probably for the next 100 or 150 years…we want to get the next generation of gamechangers involved”, Hamm told the FT. Do it kids, there’s no industry more global, more exciting, more critical than this one.

• Shell invests in Canada’s Ksi Lisims LNG - the major signed a long term supply deal to buy 2 mtpa of LNG over 20 years from the planned floating facility in British Columbia, due onstream in 2030.

• Astara bags Blackspur Oil - the deal for the Canadian producer with producing assets in Alberta is worth $55m.

🏰 Europe

• “Pilot light” at Groningen - as Europe braces for a cold snap, the Dutch government has started minimal production from the giant Groningen gas field (Europe’s largest) in case it needs to ramp up output to meet emergency needs. The mega field was controversially closed last year after being gradually ramped down over several years for causing “earthquakes”. We’ve missed you Gronny, good to have you back.

• HitecVision sells Moreld Group - the Norwegian private equity company sold the oil service firm to UK-based McIntyre Partners for an undisclosed sum. Moreld had revenue of ~$480m last year so you’d expect the value of the deal to be at least $1bn.

🕌 The Middle East

• Saudi cuts official crude selling price - Aramco has reduced the February 2024 official selling price (OSP) of its Arab Light crude for buyers in all regions by the largest amount in more than a year. The move is interpreted as an indication of softening demand for oil amid competition from other suppliers.

🗿 Central & South America

• Guyana’s first refinery - the darling of the global oil industry is in talks with potential investors to build a 30 kb/d refinery, the country’s first. A timeline hasn’t been disclosed but the building of a new refinery will buck a trend that’s seen the Caribbean’’s refining capacity decline from 1.6 mmb/d to just 0.16 mmb/d in the past 35 years.

🌍 GEOPOLITICS & MACRO

• Saudi borrows $12bn to fill fiscal hole- the kingdom issued its largest quantity of bonds since 2017 as it works to plug a fiscal deficit over the next few years. Current crude prices are well below what Saudi needs to balance its bloated budget. Saudi, the most powerful actor in the oil market, really needs higher oil prices…

• Bears pile into oil markets - speculators have added one the largest quantities of short positions on oil prices in years at the start of 2024 amid concerns of oversupply. Time to buy?

• Tightening offshore rig market - analysis from Westwood predicts the global offshore rig fleet will reach 96% utilization in 2024. A tightening supply / demand balance for rigs already pushed up rates last year with some rig types costing a cool $500k per day to lease. Puts your holiday car rental into perspective doesn’t it?

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Microsoft’s huge solar deal - the tech giant has signed a deal with a South Korean solar panel manufacturer for 12GW (that’s a lot!) of panels through to 2032 in what is one of the largest ever deals of its kind. Microsoft has a goal of powering its operations with 100% low carbon energy by 2025.

• Statkraft’s $6.6bn hydro and wind investments - the Norwegian state-owned power company is splashing the cash to upgrade its power generation assets and increase annual generation by 3TWh. Norway, with both ample hydro resources and large volumes oil & gas reserves, won the energy endowment lottery.

• Sweden and Thailand complete landmark carbon credits deal - this represents the first time that carbon credits have been traded internationally under the Paris Agreement Article 6. Article 6 is all about the thorny issue of national accounting of carbon credits. In this case, the Swedish company that bought the credits will now be able to use them to fulfill its own domestic emissions targets, making the credits ineligible to count towards Thailand’s targets.

• NuScale’s troubles deepen - the struggling nuclear small modular reactor company is laying off 28% of its full time staff to cut costs. NuScale was the first company in the US to receive approval for its promising SMR designs but has since faced cost and marketing issues, forcing it to cancel one of its flagships projects in Utah last year.

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO 

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