12th January 2024

Hearing about some more deliverability issues yesterday so some of you may not have got our email again.

Sorry. I think it’s a platform issue. Hopefully it gets resolved today. If you want to catch up, you can find all past installments on our website.

Right, let’s go.

• 🌊 The incoming LNG tsunami

• ❌ Hertz offloading 20,000 EVs

• 💥 US and UK bomb Yemen

• 🤑 Chesapeake confirms Southwestern takeover

• ➕ plus: nationalizing Norway’s gas pipelines; the uranium train continues; spluttering global growth; China’s record crude imports.

Have a top weekend. See you Monday.

📈 THE NUMBERS

Oil prices jumped by 2% after the US and UK rained fire on the Houthis in Yemen in retaliation for the spate of Red Sea attacks.

🗞️ WELL-HEADLINES

 🗽 North America

• Chesapeake confirms Southwestern takeover - the widely expected all-stock deal values Southwestern at $7.4bn and will create the largest independent US gas producer with output of 7.9 bcfe/d. A core driver behind the deal is positioning ahead of the US LNG export boom. Most of Southwestern's production is in Appalachia in the east US and in the Haynesville shale basin close to US LNG export plants. When the deal closes in Q2, the company will have a new name, which hasn’t been revealed yet.

• Total denies NextDecade sale rumours - the French major owns a 17.5% stake in the US LNG company which is developing the giant 27 mtpa Rio Grande LNG facility in Texas.

• Japan’s Kyushu Electric Power eyeing up Lake Charles LNG - keen to secure future energy supplies, Japan is on the hunt for strategic investments around the globe and the burgeoning US LNG sector is a tasty target.

• Malfunction closes Total’s Port Arthur refinery - it’s not clear how long the 238 kb/d facility in Texas will be offline for.

🏰 Europe

• Nationalizing Norway’s gas pipes - talks are underway as the government looks to take ownership of the ~9,000kms of offshore gas pipelines. The pipes are a vital piece of infrastructure that supply gas to the rest of Europe and the Norwegian government has said owning them is a matter of national security.

  • The recent attacks on Nord Stream II and the Balticconnector pipe will no doubt have added impetus to this move as Norway probably calculates that any adversary would think twice about attacking a critical NATO state-owned asset.

  • Based on previous transactions for interests in the pipeline network, it’s worth at least $10bn.

• Shell and Harbour squabble over crude pricing - the two companies are in arbitration over how to price crude from the UK’s Clair and Schiehallion fields.

⛩️ Asia & Oceania

• China’s post-pandemic recovery complete? - the country’s crude imports hit an all time high in 2023 of 11.2 mmb/d on average, an increase of 11% on 2022. The rise was largely driven by an increase in domestic travel following the lifting of Covid restrictions.

• Inpex ups its stake in Ichthys LNG - it bought a 1.6% interest in the Australian project from Tokyo Gas to take its total stake to 67.8%.

🦁 Africa

• Eni spins the drill bit in Ivory Coast - the Italian major has started drilling a closely watched exploration well about 100 kms west of its huge play-opening offshore Baleine oil & gas discovery.

🗿 Central & South America

• Peru’s NOC needs $1.6bn - Petroperu is looking for more financial support to pay for upgrades to its Talara refinery and crude imports this year. It will release plans to fill this hole next week. Can anyone spare some change?

🌍 GEOPOLITICS & MACRO

• The incoming LNG tsunami - Bloomberg released a great article highlighting the vast quantities of new LNG capacity arriving onstream around the world in the coming years, led by the USA, and Qatar. ~$290bn is due to be invested in new LNG export capacity between 2019-2025 which will help displace coal, especially in Asia. LNG still only meets ~3% of global energy demand. This mega trend has only just begun.

• US and UK airstrikes in Yemen - Biden said the airstrikes against the Houthis at 16 locations across Yemen were “a clear message that the US would not tolerate hostile actors to imperil freedom of navigation”. The Houthis have poked the bear and are now facing the inevitable consequences. Let’s hope these strikes are enough to deter future Red Sea attacks as a continued allied operation against Yemen doesn’t bode well for anyone, especially the long-suffering Yemeni people.

• IMF sees “resilient” but slow global economic growth in 2024 - after a stronger-than-expected performance last year, the global economy is set to grow at 2.4% in 2024, which would represent slowing growth for the third year in a row. Pre-COVID growth was at 3.8%. “We do have work to do to lift global growth, especially over the medium term”, said an IMF spokeswoman.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Hertz offloading thousands of EVs - the giant car rental firm has announced that it’s selling 20,000 EVs from its US fleet citing high repair costs for EVs. Hertz will replace the cars with good old gasoline cars. This is the latest setback for the stalling EV market that has seen growth slow in recent months and EV makers rein in their production plans.

• Uranium smashes through $100/lbs - spot prices rose by ~6% yesterday, taking the uranium price through the symbolic $100/lbs mark for the first time since 2007. The price of uranium has doubled over the past year as energy policy focus shifts towards nuclear power and miners find themselves short of supply.

🛢️ BOTTOM OF THE BARREL

Crude prices can’t make their mind up so far this year

👋 BEFORE YOU GO 

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