11th September 2024

A little late today, forgive me. Anyway, here’s your morning drop of all things oil, gas, and energy, without the hot air:

• 👀 “Never seen anything like it”

• 💨 Here comes Francine

• ⏱️ 10 days to save Sounion

• 🚢 Qatar’s LNG armada

• ➕ plus OPEC lowers demand forecasts; Rex Tillerson ready for the waves; APA’s $950m mystery sale; Norway fears Russian sabotage; the folly of oil price predictions; another “breakthrough” gas discovery in China, and plenty more.

Let’s take a peek…

📈 THE NUMBERS

Oil prices tanked by ~4% yesterday, with Brent falling into the $60s and hitting a three-year low.

Fear not though, crude finally saw some green today. Let the good times roll.

🗞️ WELL-HEADLINES

 🗽 North America

• Here comes Francine - Exxon, Shell, and Chevron and others have evacuated staff and paused operations at 130 oil platforms in the GoM as tropical storm Francine (expected to develop into a hurricane) closes in. ~25% of GoM production is estimated to be offline.

• APA in $950m sale to mystery buyer - the assets include 21 kboe/d of production in the Permian basin, and APA said it would use the proceeds to pay down debt.

• GoM under threat from environmental ruling delay - the API has said that unless a new assessment on how endangered species should be protected in the region is quickly published, drilling in the GoM could cease.

• Pembina bags Canadian midstream assets from Veren - the $400m deal includes 320 mmcf/d of natural gas handling capacity and 53 kb/d of liquids handling capacity in Alberta Montney.

🏰 Europe

• Equinor hits pay at Haltenbanken Vest - the discovery in the Kristin area of the Norwegian Sea is estimated to hold ~25 mmboe of recoverable resources.

• Troll starts getting power from shore - Equinor’s Troll B and C platforms in the NCS have started receiving partial power from shore as part of push to reduce emissions. This makes plenty of sense in hydropower-abundant Norway.

🕌 The Middle East

• Qatar’s growing LNG armada - Qatar Energy has ordered another 6 state-of-the-art, world’s-largest LNG vessels from a Chinese shipbuilding company. Qatar now has a mind blowing 128 LNG carriers on order as it looks to dominate the global LNG industry and provide tankers for its ongoing LNG capacity expansion.

• 10 days to save Sounion - the US Special Envoy for Yemen has warned that the burning tanker, with 1 mmbbls on board, in the Red Sea is just 10 days away from an environmental disaster that would be 4x worse than the Exxon Valdez spill. “We’re in a race against time”, he said.

• The Rex Tillerson is ready for the waves - Qatar has inaugurated a new LNG tanker named after the former Exxon boss. Tillerson was at the helm of Exxon as the company invested billions into Qatar to expand its LNG sector. Nice one Rex, that’s pretty awesome.

⛩️ Asia & Oceania

• CNOOC’s “breakthrough” gas discovery - it feels like these are coming around every other day at the moment. This discovery at the Liwan 4-1 structure in the Pearl River Mouth Basin apparently marks the first major exploration success in ultra-deepwater carbonate rocks off the coast of China. Is China’s offshore sector taking off?

• China filling up its SPR - taking advantage of low oil prices, Energy Aspects reckons that China is buying ~500 kb/d of crude for its strategic petroleum reserve. Reliable data on China’s SPR is almost non-existent but some estimates put its levels at ~300 mmbbls, roughly the same size as the US’.

🦁 Africa

• Libyan barrels are returning - crude exports have reportedly resumed loading from most of the country's eastern ports and some oil fields have received orders to bring back production. Great, just what the oil market needs right now. The shut down had taken ~700 kb/d of production offline.

• Chariot’s share price drops 35% - the indy’s exploration well offshore Morocco sadly discovered only water. E&P can be a cruel game.

🗿 Central & South America

• Petronas needs more boats - the Brazilian giant has kicked of a $1bn tender for 10 new-build offshore support vessels. The tender has high local content requirements, meaning it is designed to support domestic shipbuilding activity.

🌍 GEOPOLITICS & MACRO

• “Never seen anything like that” - former Goldman head of oil, Jeff Currie, told APEPEC that fears of a major oil glut are “completely overplayed…weaknesses in demand are being deeply exaggerated by base effects and by destocking…The key issue there is, the market is dramatically overestimating that flood [in oil supply], and it’s reflected in record short positions … and I’ve never seen anything like that”. Hope you’re right Jeff.

• OPEC revises down demand - while insisting demand growth was still “healthy”, OPEC’s latest monthly report lowered its 2024 oil demand growth forecast slightly from 2.11 mmb/d to 2.03 mmb/d, while the 2025 demand growth changed from 1.78 mmb/d to 1.74 mmb/d. Total global oil demand is forecast to reach 104.2 mmb/d in 2024 and 106 mmb/d in 2025.

• At least the EIA is bullish - the agency sees oil prices heading back above $80/bbl (bold call!) in the short term as faster-than-expected global demand growth continues to deplete global crude stockpiles

• Norway fears Russian sabotage - the head of Norway’s foreign intelligence service believes Russia, which he described as a “pariah state” is increasingly likely to target Norway’s energy infrastructure. After the Nord Stream II sabotage, Norway’s Navy was deployed to protect its oil & gas platforms but with some 9,000 kms of pipelines and over 90 oil & fields, this is no easy task.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Neste’s biofuels are struggling - the refiner cut its margin and sales outlook for its biofuel business for the third time this year, sending the company’s share price down by 10%. Rapidly expanding Chinese biodiesel producers are starting to flood the market apparently - that same old story…

🛢️ BOTTOM OF THE BARREL

As every man and his dog starts chipping in with opinions on the outlook for oil prices, just remember, no one has a clue.

Not Goldmans, not OPEC, and definitely not your Urals trader mate Steve.

👋 BEFORE YOU GO 

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

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