9th November 2023

Morning Both Barrels crew. Here’s your daily dose of all things oil, gas, and energy, without the hot air:

• 🎉 Shell suing Greenpeace. Bravo.

• 😮 A $4m queue jump

• 🇨🇳 What’s up with China’s economy?

• 🐮 Exxon breathing life into the dead cow

• ➕ plus an earthquake in oil country; Turkey / Iraq pipeline saga continues; oil and healthcare.

Let’s dive in.

📈 THE NUMBERS

Another rocky day for oil and oil & gas equities yesterday, with WTI falling by ~$2.5/bbl to ~$75/bbl, its lowest level since July. Steady as she goes today, though. So far.

Fingers are being pointed at China’s economy so we’ve unpacked that a little further down.

🗞️ WELL-HEADLINES

 🗽 North America

• Texas hit by 5.3 magnitude earthquake - it was the second largest quake to have ever hit West Texas oil country. Thankfully damage and injuries were minimal. Some suggest that all the fracing in the region, in particular the injecting of waste water deep underground, is responsible for increasing numbers of earthquakes. I have no idea if this has been proven or not - anyone know?

• TC Energy hunting for partners - the Canadian pipeline operator, which runs the Keystone pipeline, is searching for JVs in Mexico and Canada as part of its $2.2bn divestment program. If you’re in the market for North American pipelines, hit ‘em up.

• EIA crude stock numbers delayed until next week - the agency is updating its tech systems apparently so we’ll have to wait to see if they confirm yesterday’s mega crude build.

🏰 Europe

• Eni dodgy crude cargo case dropped - in 2019 Eni was duped into buying a cargo of crude that it thought was from Iraq but actually contained Iranian oil, which would have fallen foul of sanctions. A judge has dropped proceedings against the alleged fraudsters who sold the oil to Eni.

• Eni renewables stake sale imminent - the deal to divest a 10% stake in its Plenitude renewables unit to Energy Infrastructure Partners will bag Eni a reported $800m.

• Moscow demands more cash from Gazprom - in a bid to help tackle declining revenues, the government is set to hike taxes on its flagship gas producer.

🕌 The Middle East

• Turkey / KRI pipeline saga rumbles on - Iraqi and Kurdistan officials met for the first time (only now?!) to discuss restarting the 450 kb/d crude export pipeline which has been shut since March over a spat between Kurdistan and Turkey. They made no progress…The restart of the important pipeline has been a “will they? won’t they?” affair for months.

⛩️ Asia & Oceania

• Pertamina force majeures LNG SPA with Gunvor - it didn’t give a reason for why it’s suspending the contract signed last year but said it would last "no less than several months of year 2024".

• Gunvor exiting Singapore oil storage - the trader has stored fuel oil at the PetroSeraya terminal for over a decade. Sinopec is taking over the lease.

🦁 Africa

• Nigeria LNG still struggling - a year after the massive 22.5 mtpa facility had to cut output by up to 50% after flooding restricted feed gas supply, a company spokesman said the “force majeure” remains in place. Sabotage and low production from old wells are also hampering supply of gas to the plant.

• Sudan’s oil sector falls deeper into the abyss - the oil product storage tanks at Sudan’s only refinery have been destroyed. Both sides in the civil war blamed each other for the explosion. The refinery has been shut since July.

• Dana Gas expanding in Egypt - the indy announced plans to invest up to $100m in Egypt and drill 11 new wells as part of an expansion plan in the country.

🗿 Central & South America

• Exxon breathing life into the dead cow - Exxon has launched a tender to build a 12 kb/d, 43 km export pipeline to carry oil out of Argentina’s Vaca Muerta shale patch. The province has huge output potential but growth has been stalled by lack of investment, particularly into infrastructure. 12 kb/d ain’t massive but poco a poco.

🌍 GEOPOLITICS & MACRO

• A $4 million queue jump - as Brit there are few things more sacrosanct than the integrity of a queue, so this is painful to write, but a Japanese ship has paid $4m to jump to the front of the growing line at the parched Panama Canal. That’s on top of the ~$500k transit fee for large ships. We wrote yesterday about the large delays for ships using the canal due to low water levels.

• What’s up with China’s economy? - oil prices have been sliding in recent weeks in large part due to concerns about economic growth in China. So what’s the d-low?

  • Consumer prices keep declining, suggesting sluggish consumer spending.

  • Oil inventories are climbing in China, implying weak demand.

  • Air travel is lower than expected. The post-COVID “revenge travel” hasn’t quite materialized yet.

  • GDP growth forecasts have been revised upwards although still see a slow down moving into next year.

• UK levies more sanctions on Russia - the measures target 1,800 individuals and businesses in Russia’s oil and metals sector and will apparently “continue to deal a heavy blow to the Kremlin's war economy”. I’m sure Moscow is terrified.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Not even close - a UN report has showed there’s a huge gap between projected hydrocarbon output and what would be needed to hit 1.5° warming goals. We’ve written about this before but there’s no chance of us hitting those targets. Whatever you think of carbon and climate, we’re running the global warming experiment. Hold onto your hats. Or don’t. Hopefully the climate models are wrong.

• Shell is suing Greenpeace - Brilliant. Shell is after $2.1m in damages after activists / nut jobs boarded one of Shell’s moving vessels in the Atlantic (and stayed on it all the way to Norway) earlier this year. If you ask me, Greenpeace should be sued by humanity as a whole for doing everything they can to prevent the provision of life-giving energy.

🛢️ BOTTOM OF THE BARREL

Thank you for being such a loyal oil & gas customer, Roger. We wish you a speedy recovery.

👋 BEFORE YOU GO 

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