11th October 2024

Fridyay. Let’s go.

• 👀 All eyes on Israel

• 🛢️ What can you get from a barrel of crude?

• ⛽ Giant floating gas stations

• 🌍 Powering Europe from Africa

• ➕ plus Thailand’s untapped riches; Conoco cleared to go after PDVSA; crude stocks rise; Leviathan’s getting bigger; Germany’s recession deepens; good inflation news; and plenty more.

Have a great weekend.

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📈 THE NUMBERS

Another bumpy week for oil prices as the prospect of chaos in the Middle East contends with a jump in crude stocks and lingering concern over Chinese demand.

🗞️ WELL-HEADLINES

 🗽 North America

• Conoco gets clearance to go after PDVSA - Conoco claims it’s owed $10bn by Venezuela following expropriation of its assets and a US judge has now granted the company approval to pursue legal action without falling foul of US sanctions.

• Deadly chemical leak at Pemex’s Deer Park refinery - details are scarce but two people have died and several injured after a leak at the 312 kb/d facility in Texas.

• Shell setback in Venture spat - a court has denied Shell access to non-public commissioning documents related to Venture Global LNG's Calcasieu Pass facility. Shell and others trying to sue Venture were hoping the docs would help them prove that Venture LNG was violating contracts by selling LNG cargoes on the spot market instead of to them.

• Crude stocks climb, gasoline demand rockets - after several weeks of decline, US oil inventories rose by 5.8 mmbbls last week to 423 mmbbls, surpassing analyst expectations of a 2 mmbbls rise. Gasoline stocks were down by 6.3 mmbbls, helped by US gasoline demand rising by the most in a single week since 2001.

🏰 Europe

• Majors LNG bunkering ambitions - Eni and Total are increasing their presence in the small but growing LNG bunkering market. Eni has chartered the LNG bunker vessel Avenir Aspiration, while Total has chartered one of its own from Spanish shipowner Ibaizabal.

• Shell liquidating Russian subsidiary - the move comes just a few days after Russian authorities launched an attempt to recover $1 billion awarded to Shell, and still sitting in a Russian bank, for the expropriation of Shell’s stake in the country’s Sakhalin 2. Looks like Shell is trying to take its money and run. Good luck.

• Exxon and the Minotaur - Exxon is cracking on with a second phase seismic study for gas exploration offshore Crete. There so much still left to find out there.

🕌 The Middle East

• NewMed banks $400m for Leviathan expansion - Israeli banks have provided the capital which is earmarked for increasing production capacity at the offshore gas field from 1.1 bcf/d to 2 bcf/d. Refreshing to see there are still some banks out there funding upstream E&P.

• Qatar and Shell’s naphtha deal - Shell will supply 18 mt of naphtha to Qatar over 20 years, which Qatar says is the largest and longest deal of its kind to date. Naphtha is derived from crude and is often used to dilute heavy oil or as a fuel.

• Baker Hughes lands record order - Dubai Petroleum has ordered 10 Integrated Compressor Line (ICL) units Margham Gas storage facility in Dubai. The order for the ICLs, which are crucial (and expensive) bits of kit for compressing gas in pipelines, processing plants, and storage facilities, is Baker Hughes’ largest ever for those units.

⛩️ Asia & Oceania

• Thailand’s untapped riches - Thailand and neighbor Cambodia are reopening negotiations over the development of an offshore oil and gas field that is estimated to hold 10 tcf of gas and 300 mmbbls of oil. They’ve been squabbling over how to fairly develop the field since the 1970s…!

• Japan ramping up its emergency LNG stockpiles - Japan currently buys 3 cargoes (~0.2 mtpa) of LNG every year for its strategic LNG reserve. It’s now considering multiplying that 4-fold to 12 cargoes a year. Resource-poor Japan understands the importance of energy security.

• Santos secures $800m loan for Darwin LNG - the money will be used to fund life extension works at the LNG project in Australia which has been running low on gas supplies but is due to get a new lease of life thanks to the under development Barossa field which will extend the life of Darwin LNG by ~20 years.

• “Major blow” to east Australia gas hopes - Norwegian seismic specialist TGS has axed plans to carry out Australia’s largest ever offshore seismic survey. East Aus is facing an impending gas shortage and so this news is not what the doctor order.

• Agra Energi looking at $500m Sumatra sale - the company is looking to offload its 16.7% stake in the North Ganal Block, offshore Indonesia. Eni owns the other 83.3%.

🦁 Africa

• Nothing piqued my interest here.

🗿 Central & South America

• Squeezing more out of Guyana - Exxon is boosting capacity at its Liza Unity FPSO on the Stabroek block in Guyana by 18 kb/d to 270 kb/d. Exxon currently produces ~ 665 kb/d of oil in Guyana and is targeting production of over 1 mmb/d in the not so distant future.

🌍 GEOPOLITICS & MACRO

• All eyes on Israel - the country’s security cabinet met yesterday to vote on its response to Iran’s ballistic missile attack. The defence minister said the response would be “powerful, precise, and above all – surprising”. Let’s not do anything rash, guys. No one wins in war.

• Gulf states getting worried - Saudi Arabia, UAE and Qatar, which have all have banned Israel from using their air space, are lobbying the US hard to do what it can to prevent Israel from attacking Iran’s oil facilities. They fear their own O&G infrastructure will come under fire if an energy war kicks off.

• Germany’s deepening recession - the country is forecasting a 0.2% in decline in its GDP this year, marking the second consecutive annual recession. That hasn’t happened since the early 2000s. Germany is paying the heavy price for its energy complacency (dependence on cheap Russian gas) and its energy illiteracy (closing nuclear plants and trying to rely on wind and solar). A cautionary tale.

• US inflation falls to 3-year low - woop woop. Inflation came in at 2.4% (according to official figures) in September, its lowest level since Feb 2021.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Powering Europe from Africa - Rystad Energy estimates that 24 GW of power could be delivered to Europe from north Africa within the next 10 years, enabled by giant wind and solar projects and subsea interconnectors. If that 4,000 kms Xlinks project from Morocco to the UK ever goes ahead I’ll eat my hat. Financing challenges, technical challenges, supply chain challenges. It’s a vanity project.

• Exxon secures largest US offshore CO2 storage site - the 271,000-acres in Texas state waters will be surveyed for suitable geological locations for CO2 injection. Exxon operates the largest network of CO2 pipelines in the US.

• More UK low-carbon subsidies - the hell-bent-on-net-zero UK government is set to reveal plans for subsidizing long-duration energy storage (i.e. batteries and pumped hydro) by offering minimum guaranteed payments for developers. Who pays for that? Bill payers of course.

• Iberdrola doubling UK investment plan - the Spanish energy company now plans to invest $31bn across 2024-2028 in the UK, most of which will go on power transmission and distribution networks.

🛢️ BOTTOM OF THE BARREL

In the UK, utilities are starting to try and normalize power cuts…

Start stocking up on candles.

👋 BEFORE YOU GO

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

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