11th July 2024

Good morning team. Here’s your daily dose of all things oil, gas, and energy, without the hot air:

• 🤑 Norway so rich

• 🤷 Oil demand? Who knows

• ⚔️ The endless war

• 🤡 World class green hypocrisy

• ➕ plus Saudi bond bonanza; power rationing in California: Freeport restarts; crude inventories fall; Indo going nuclear; Honeywell splashes the cash, and plenty more.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Freeport LNG restarting after Beryl - the second largest LNG facility in the US (15 mmtpa) is set to fire back up today after a power outage earlier in the week caused by Hurricane Beryl.

• Honeywell makes $1.8bn Air Products LNG buy - the all cash deal is for Air Product’s LNG process technology and equipment business. The value implies a 13× 2024e EBITDA multiple.

• Crude inventories fall further - after the previous week’s big draw of 12.2 mmbbls, the EIA has reported a further 3.4 mmbbls decline in oil stocks last week. Gasoline stocks fell by 2 mmbbls.

• More SPR top ups - the US govt. is looking to buy another 4.5 mmbbls to help top up the depleted SPR. The DOE has bought back ~40 mmbbls over the past year after dubiously draining the strategic reserve at record rates in 2022 to keep gasoline prices down and appease voters ahead of midterm elections.

• CGF and Strathcona in $2bn CCS partnership - the 2 mtpa CCS facilities will be built at Strathcona’s oil sands facilities across Saskatchewan and Alberta.

• Enagás divests stake in Tallgrass to Blackstone - the sale involves a 30.2% stake in the US energy infrastructure company for $1.1bn.

🏰 Europe

• Norway so rich - for the first time in its ~30 year history the value of Norway’s oil-funded sovereign wealth fund has hit 18 trillion Norwegian crowns (~$1.7 trillion). The fund owns on average a mind-blowing 1.5% of all listed companies globally and is worth $310,000 for every man, woman, and child in Norway. Bonkers. Meanwhile, the UK’s North Sea oil wealth…

🕌 The Middle East

• Saudi bond sells like hotcakes - yesterday we reported how Aramco was looking to raise $3bn through a bond issue. Turns out every investor and his dog wanted a piece of it, and the company attracted a whopping $31bn of orders, and ended up taking $6bn.

• Kurdish oil smuggling to Iran is booming - since the major export pipeline from Kurdistan shut last year, brokers are having to find other ways of getting the crude out: an armada of trucks.

⛩️ Asia & Oceania

• Woodside signs Taiwan LNG deal - the deal involves 6 mt to be delivered over 10 years, with the possibility of rising to 8.4 mt for a further decade.

🦁 Africa

• Egypt strikes deals with international E&Ps - five new oil agreements for onshore and offshore acreage include a deal with Eni to operate two exploration blocks in the Mediterranean Sea.

• Angola launching frontier licencing round - the process will kick off in 2025 and cover multiple blocks ­in the under-explored Kwanza and Benguela basins.

🗿 Central & South America

• Engie and Macquarie to partner in $3bn Mexico pipeline - the new 700km pipeline will double the gas transportation capacity through the Yucatán Peninsula.

• Shell abandons Brazil block - it’s returning the Alto de Cabo Frio Oeste area after disappointing exploration results in the giant pre-salt region of the prolific Santos basin. Shell acquired the PSC back in 2017 for a signature bonus of $107m.

• The oligopolisation of Venezuela’s oil sector? - in the latest energy deal with powerful family-owned conglomerates, business mogul, Ricardo Cisneros, has entered a JV with PDVSA to grow oil production in the western state of Zulia.

🌍 GEOPOLITICS & MACRO

• NATO vows 'irreversible path' to Ukraine membership - meanwhile, the US confirmed US-built F-16 jets were on their way to Ukraine. Welcome to the endless war.

• OPEC reiterates bullish oil demand forecasts - in its latest Monthly Oil Market Report, the group has forecast crude demand to climb by 2.25 mmb/d this year, and a further 1.85 mmb/d in 2025. OPEC cited “resilient economic growth momentum in major economies”. In contrast, the perma-bears at IEA see just 0.96 mmb/d of demand growth this year. Time will soon tell.

• BP releases its annual Energy Outlook - some highlights: oil demand and CO2 emissions to peak next year (really?!), primary energy demand grows by just 5% to 2050 even on current trajectory; gas demand to grow 20% by 2050 on current trajectory; electrification continues apace; wind and solar contribute almost all new power generation.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Power rationing in California? - the grid operator has warned that residents and businesses may need to restrict their power use as hot weather drives up demand and puts strain on the state’s renewables-heavy gird. Funny (but not for anyone who can’t use their aircon).

• Indonesia going nuclear - the world’s 4th most populous country (275m people) has incorporated nuclear into its clean energy plan after previously describing it as a “last resort”. The world is well and truly waking up to the benefits of a nuclear future.

• Wind subsidies must rise to meet UK renewables goals - says climate think tank, Ember. But I thought wind and solar were now the cheapest forms of power? Why would they need more subsidies if they’re so cheap? I’m so confused.

• Amazon hits 100% low-carbon power goal 7 years early - the tech giant has invested heavily in wind and solar projects over the past 5 years.

🛢️ BOTTOM OF THE BARREL

A Green party leader in the UK is opposing pylons for wind farms in his back yard.

The greens will insist on building masses of disruptive, ugly, low carbon infrastructure so long as it’s not anywhere near them.

And continuing on the theme of “Do as I say, not as I do”, here’s a hilarious video of the UK’s new Energy Secretary telling everyone to buy an EV, only to get caught out for not even having one himself.

What a bunch of clowns.

👋 BEFORE YOU GO 

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

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