13th September 2024

Happy Friday.

Here’s what’s what today in the wonderful world of oil, gas, and energy:

• 🦌 An oil country without a refinery

• 😬 In the wake of Francine

• 🇦🇫 A Taliban petrostate?

• 🛑 Putin’s red line

• ➕ plus Exxon warns activists; Oxy’s DAC lands more funding; the Viper in the Tumbleweed; crude stocks climb; China raises retirement age; PE in Middle East pipeline; Aramco getting busy in China, and plenty more

Have a good one.

📈 THE NUMBERS

Oil prices popped up on the disruption caused by Francine but don’t get too excited, the impact is likely to be short lived…

🗞️ WELL-HEADLINES

 🗽 North America

• In the wake of Francine - ~42% of crude (730 kb/d) and 53% of gas (992 mmscf/d) of production was shut in yesterday in the GoM by Hurricane Francine. However, the storm quickly passed and terminals and refineries in Texas have already reopened after the short-lived disruption, with no major damage reported.

• Viper in $1.1bn Tumbleweed buy - the deal involves 3,237 net royalty acres in the Midland Basin and 490 in the Delaware Basin. Viper is paying $461m in cash and 10.1 million Viper Energy Partners LLC units, for a total deal value of ~$1.1bn.

• Exxon to go after activists - CEO Darren Woods said the company will continue to sue activists shareholders who “abuse” the proxy proposal process. Earlier in the year Exxon fired warning shots by suing activist shareholders Follow This and Arjuna Capital. The case was dismissed by a judge but the message was sent loud and clear. Love to see it.

• Oil stockpiles climb - crude inventories rose by 0.8 mmbbls last week to 419 mmbbls, more or less in line with expectations. Meanwhile, gasoline stocks were up by 2.3 mmbbls to 221.6 mmbbls.

🏰 Europe

• Scotland’s refinery demise - the country’s only refinery at Grangemouth will close next clear after 100 years in operation, Petroineos confirmed, citing economic difficulties. The plant apparently loses $500k per day and can’t compete on in the international stage. The site will be turned into a fuel import terminal, with the loss of ~400 jobs. An oil rich country without a refinery…

🕌 The Middle East

• BlackRock buys stake in Saudi / Bahrain pipeline - the seller, Bapco Energies, will retain a majority stake and governance over the key 112km pipeline that supplies crude oil from Aramco to Bapco refinery, Bahrain's national refinery. The value of the deal was kept hush.

⛩️ Asia & Oceania

• A Taliban petrostate? - Afghanistan’s Taliban government is trying to spur the country’s upstream oil production and has struck a deal with neighboring Uzbekistan to buy and refine its crude. But don’t worry, with total national production of ~ 8 kb/d, they ain’t gonna be joining OPEC anytime soon. Although some estimates suggest that the Amu Darya basin that spans Afghanistan and Tajikistan holds ~ 1bnbbls of oil…

• Aramco schmoozing in China - as part of its drive to invest in downstream operations in its key customer markets, Aramco has signed agreements with two Chinese refiners that set the stage for further investments.

• First gas from West Belut - Medco’s 55 mmcf/d gas field offshore Indonesia is being produced via an unmanned facility, fully powered by solar photovoltaic energy.

🦁 Africa

• Confusion reigns in Libya - some reports suggest that output is ramping back up after the blockade, but others describe a much more alarming, persistent issue. Who knows? The country’s oil exports were at ~200 kb/d last week, down ~80% from the pre-shutdown rate of ~ 1 mmb/d.

• Nigerian communities want $310m from Shell - they claim that Shell breached a court order by agreeing to sell its onshore assets in the Niger Delta in a $2.1bn deal in January. The question is whether Shell is allowed to sell the assets while it is subject to an ongoing lawsuit regarding an oil spill. I bet Shell can’t wait to get out of there…

🗿 Central & South America

• Looks like they took an early weekend over in Latam. Alright for some.

🌍 GEOPOLITICS & MACRO

• Russian red lines - as Western countries discuss complying with Ukraine’s request for long range missiles that could strike Russia, Putin has warned that such a move would “significantly change” the nature of the conflict and put Russia “at war” with NATO. So far Ukraine has eventually got what it’s asked for (tanks, air defence, fighter jets), so we might soon find out if Putin is bluffing or not.

• Putin’s sanction revenge - in return for Western sanctions on Russia, Putin is considering limiting the exports of key commodities: “Russia is the leader in strategic raw materials reserves like uranium, titanium, nickel…maybe we should also think about restrictions,”

• IEA cuts crude demand estimate - the perma-bears at the IEA have reduced their 2024 oil demand growth estimate by 70 kb/d to 900kb/d. The agency sees 2025 demand growth at 950 kb/d. This compares to 2.1 mmb/d in 2023. Lackluster demand in China is to blame, “as the broad-based economic slowdown and an accelerating substitution away from oil in favour of alternative fuels weigh on consumption”. Meanwhile, OPEC sees wildly different demand growth in 2024 of 2.03 mmb/d. If I were a betting man (which I am) my money would be on somewhere in the middle.

• China raises retirement age for the first time in 46 years - if that’s not a signal of longer term economic concern in the world’s second largest economy, I don’t know what is. China is battling a demographic pickle as its population ages and workforce shrinks. To be fair though, women in China can currently retire at the ripe old age of just 50.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• More dosh for CCS - Oxy’s CCS unit, 1PointFive, has been landed $500m in funding from the US government for the development of its direct air capture project in Texas. The project, which will have the capacity to scrub 0.5 mtpa of CO2 from the air, is due to be operational in sometime next year, and has already secured buyers including Microsoft and AT&T.

🛢️ BOTTOM OF THE BARREL

I can’t say I disagree with this. We all want a sustainable planet but today’s incarnation of the net-zero movement has strayed a looooong way from that ideal.

Anyone else pumped for this new series about the US oil patch?

👋 BEFORE YOU GO 

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

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