10th November 2023

Morning, morning. Here’s Both Barrels with all that matters in oil, gas, and energy. What not to miss today:

• 🤥 “It’s all a ploy”

• 🇮🇳 India’s oil demand has a long way to run

• 💰 Two Bundestag energy bailouts

• ⚛️ A blow to SMRs

• ➕ plus an outage at Gorgon; Russia shrugs off LNG sanctions; Suncor’s driverless trucks.

Have a cracking weekend everyone.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Judge upholds approval of Conoco’s Willow project - the $8bn O&G development in the Alaskan Arctic has been opposed by environmental and tribal groups but a judge dismissed their lawsuit.

• Driverless vehicles to help Suncor cut costs - the Canadian oil sands producer is on a major cost cutting push, having recently reduced its headcount by 1,500. It hopes a plan to purchase a fleet of large driverless trucks will also save it big $$$. The trucks operate 24 hours a day and their tires last 40% longer because of smoother driving. Their video below is pretty dull to be honest, but the concept is cool, especially if you’re a bit of a tech geek.

🏰 Europe

• Russia shrugs off LNG sanctions - “No one in our country is going to abandon large-scale plans for this project or for similar projects. The development of LNG infrastructure is our priority in the energy sector”, said a government spokeswoman. Russia has big ambitions to increase its LNG capacity to 100 mtpa by 2030 from ~35 mtpa today. The US would rather it didn’t.

🕌 The Middle East

• ADNOC cutting some crude supplies to customers - the UAE NOC hasn’t provided any reasons why or details on volumes. The measure only affects crude from Upper Zakhum (one of the world’s largest oilfields), of which China is the major buyer.

⛩️ Asia & Oceania

• Minor outage at Gorgon LNG - an “electrical incident” at Chevron’s mega LNG plant in Australia has reduced output at one of the three trains to 80%. With the recent strike saga at Gorgon, the facility is providing its owner with plenty of headaches.

• One day of jail for former Petronas exec - the naughty boy was busted accepting bribes while working as a construction engineer at Petronas. Sounds like he got off lightly.

🗿 Central & South America

• Petronas doubling down on Suriname - after its successful Roystonea discovery earlier this month, Petronas will drill at least two more wells offshore Suriname next year to evaluate the area. Excitement about Suriname’s offshore prospects is running high as it neighbours Guyana’s prolific province.

• ADNOC’s bid for Braskem stake - ADNOC has made an offer worth ~$2.1bn for a 38% stake in the Brazilian petrochemical company. This is the second time ADNOC has bid for the stake and it represents a premium of over 100% to Braksem’s share price earlier in the week.

🌍 GEOPOLITICS & MACRO

• “People are pretending [oil demand] is weak. It’s all a ploy” - Saudi’s energy minister came out swinging when asked about oil demand and falling prices. He said that traders have been misreading market indicators and insisted that global oil demand was strong. Earlier this year, he said anyone betting against oil would be “ouching like hell”. Safe to say he’s not a big fan of the speculators…

• India to the rescue - right on cue, OPEC tweeted that India will be the biggest future driver of oil demand, adding 6.6 mmb/d by 2045. Indeed, if India’s per capita oil demand was even the same as China’s, let alone a European country or the US, its demand would be 9 mmb/d higher than it is today.

• Asia’s gas future - the CEO of Japan’s top utility has commented that “It’s hard to support the economic growth of [Asia]” with intermittent renewable sources, and “so the most immediate solution may be natural gas.” They aren’t going to make the same mistake as Europe.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Germany’s industry relief package - the German government has agreed a relief package to support its heavy industry that’s buckling under high energy prices. The measures include cutting taxes on electricity and will cost the German taxpayer ~$13bn next year alone. You can add that bill to the already stratospheric cost of Energiwende, the greatest domestic policy blunder of the century. Shizer.

• Wait, there’s more - Siemens Energy, the struggling wind turbine manufacturer, has reportedly agreed a $16bn bailout package with banks and the German government to sure up the company’s finances and support future project development. It sucks to be a German tax and utility bill payer right now.

• Promising Small Modular Reactor cancelled in the US - the project being developed in Utah by NuScale was to be a first-of-its-kind commercial nuclear SMR but was axed because of cost overruns, delays, and a failure to secure buyers for the plant’s output. The news is a blow to the emerging SMR industry which is hoping to bring down the costs of nuclear power generation. There are however plenty of other designs and companies still making progress in this exciting space, and SMRs are a small niche in the global nuclear sector.

• UK wind, not so cheap after all - the UK is about to offer offshore wind developers strike prices of ~£100/MWh (in today’s money), roughly 60% higher than what had been offered previously and what wind developers had promised everyone they could deliver at. For context, before Russia upended European energy markets, the long term average UK wholesale power price was ~£50/MWh, so £100/MWh represents a pretty hefty subsidy.

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO 

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