13th November 2023

Good morning Both Barrels crew. Here’s what went down in all things, oil, gas, and energy while you were (hopefully) kicking back over the weekend:

• 🖕 Majors fed up with Venture Global

• 🇺🇸 Total’s US gas power bet

• 🔋 Exxon’s lithium ambitions

• ⏬ Oil rig count still falling

• ➕ plus Glencore backs Tullow; Iraq Turkey pipeline breakthrough?; communists clean up San Fran.

Let’s dive in…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Majors cranking up the pressure on Venture - several IOCs have written to US & EU regulators asking them to intervene in their dispute with Venture Global. BP, Shell, and others allege that Venture is refusing to honor contracts to deliver LNG from its Calcasieu Pass LNG terminal in the US, and is instead selling the cargoes on the spot market where it can make more money. They accuse Venture of “misconduct” and of exacerbating Europe’s energy crisis.

• Rig counts keeps sliding - the US oil rig fleet fell by a further 2 rigs last week to 494, and is now 128 lower than a year ago. Despite the decline, US crude production is at record highs thanks to improved productivity.

🏰 Europe

• Tullow’s debt deal with Glencore - the $400m, five-year debt facility will give Tullow the finances it needs to cover debt maturing over the next few years.

🕌 The Middle East

• Iraq / Turkey pipeline deal in 3 days? - there have been many false starts on reopening the 450 kb/d crude pipeline that has been closed since March due to a diplomatic spat, but the Iraqi oil minister has said a deal is now imminent. We’ll believe it when we see it…

• Exxon finalizes exit from West Qurna 1 - Petrochina will take over operatorship of the 560 kb/d Iraqi oilfield, one of the world’s largest. The financial details were kept under wraps but Exxon was rumoured to be looking for $350m for its stake. The deal marks the end of Exxon’s presence in Iraq which got going in the aftermath of the 2003 Iraq War.

• Outage at Al Zour - a faulty valve has shut down almost all operations at the giant 615 kb/d refinery in Kuwait. Repairs are expected to take up to 10 days.

⛩️ Asia & Oceania

• China ramps up LNG trading - the world’s largest importer of LNG is increasingly reselling imports to other Asian buyers as it looks to cash in on price swings. In the first 9 months of this year, China reloaded 671,000 mt of imported LNG for resale. Back in 2020, it was just 59,000 mt. Reselling is becoming more prevalent as the share of LNG supply deals with “destination clauses” gradually declines and more players enter the market.

• Woodside reducing NWS LNG capacity - the company will close down one of the five trains at its 16.9 mtpa facility in Australia next year as it isn’t needed as gas supplies dwindle. The project has been producing LNG for 35 long years.

🦁 Africa

• Nigeria lands Saudi investment deals - Aramco will invest multiple billions in the revamp of Nigeria’s ageing refineries. The deal signed between MBS and Nigeria’s President in Riyadh also includes a pledge by Saudi to provide Nigeria with foreign currency which it desperately lacks but needs for imports.

• 275 kb/d restored after Nigeria ends strikes - NNPC announced that the volumes in its JV with Total were back onstream after reaching a resolution with workers.

🗿 Central & South America

• Finds keep coming in Guyana - GCX Energy has made a successful discovery at the offshore Corentyne block. No resource estimates were revealed but the company said the rock quality is similar to the giant Liza discovery on the nearby prolific Stabroek block.

• Petrobras’ $100bn spending spree - the company’s soon-to-be-released 5 year plan is expected to show ambitions to invest a cool $100bn into new O&G production and low carbon projects. Brazil’s O&G sector is a rare bright spot in the global conventional sector and hit a record output of 4.5 mmboe/d in July.

🌍 GEOPOLITICS & MACRO

• Joe and Xi - the leaders of the world’s two superpowers are set to meet this week in San Francisco, the first time the Chinese president has traveled to the US in six years. With wars in Europe and the Middle East, tensions over Taiwan, spy balloons, and increasing references to the Thucydides trap, the pair have plenty to talk about. No breakthroughs are expected but the meeting will be deemed a success if it can help stabilize the rocky relationship.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Exxon’s lithium battery ambitions - the major plans to start producing lithium in Arkansas in 2026, enough for ~100,000 EV batteries every year. Unlike European IOCs, Exxon has been fairly cautious (sensible) in its approach to net-zero, and so its lithium strategy is a rare foray into a low carbon business. Exxon actually invented the lithium-ion battery back in the 1970s.

• China coal guarantees - understanding the importance of reliable baseload power (which is more than can be said for some European countries), China is starting to make payments to coal plants based on their available capacity. The $$$ will ensure the plants are on hand to meet power demand and provide grid stability as wind and solar penetration increases.

• Total’s US power bet - the company is acquiring 3 gas power plants in Texas with a combined capacity of 1.5GW for $635m. Total said the plants would “offset the intermittency of renewables”, of which it has 2GW currently operational in Texas.
  

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO 

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