14th August 2024

Good morning team - this is Both Barrels. Your daily dose of all things oil, gas, and energy, without the hot air. Here’s what hit the wires today:

• 🚀 BP to the moon

• ⚔️ 50% chance of war

• 👎 IRA hype is fading

• 🦘 A flurry of good news for Aussie LNG

• ➕ plus UAE’s gas ambitions; new pipelines for the Haynesville; RIP UK O&G; Libyan pipeline up in flames; China fesses up, and plenty more.

Let’s go…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• “The most important election in our lifetime" - Harold Hamm is trying to rallying support for Donald Trump among the US oil patch, amid concerns about what the vocally anti-O&G Kamala Harris might do should she win the presidential election in November.

• New gas pipelines for Haynesville - two new pipelines (the 1.8 Bcf/d Louisiana Energy Gateway and 1.7 Bcf/d New Generation Gas Gathering) are set to begin operations next year to take gas from the shale play to large LNG facilities including the Plaquemines and Golden Pass LNG terminals. New export pipelines will be crucial in connecting the vast shale gas basins with ramping up LNG export capacity.

🏰 Europe

• BP to the moon - the major has signed an agreement with NASA to share technology and expertise gained from working “in hostile environments”. “Both BP and NASA are custodians of deep technical expertise, working in extreme environments – whether that’s at the bottom of the ocean or on the moon”, said a BP exec.

• Germany issues Nord Stream II arrest warrant for Ukrainian diver - German investigators believe the diver was part of a team that planted the explosives on the gas pipeline in 2022. Hmmm, my money’s still on Unlce Sam.

• Labour has the right plan to “kill” UK O&G - industry figures are lining up to warn about the damage being done to the UK O&G industry by new government plans that will raise the tax rate of O&G companies to 78% (!) and remove various investment incentives. As someone who spends more time than I should in O&G financial models, I can tell you that there is now almost zero appeal for oil & gas companies to invest in the UK rather than abroad. RIP.

• China admits damage to Baltic pipeline - Chinese authorities admitted that a Hong Kong flagged vessel damaged the Balticconnector gas pipeline last year. They insist it was an accident.

• Russia gasoline ban extended until YE 2024 - the measure is to maintain domestic price stability during increased seasonal demand and scheduled refinery repairs.

🕌 The Middle East

• UAE unveils gas development plans - ADNOC is aiming to become a major global gas player and has announced three more strategic gas development projects to further this aim. These include expanding its LNG capacity and multi-tcf gas field developments.

⛩️ Asia & Oceania

• Shell and PetroChina greenlight Aussie gas project - the Phase 2 expansion of the coal seam Surat Gas Project will help boost tightening domestic gas supply in Eastern Australia and provide feedstock for long-term LNG shipments.

• A new lease of life for Ichthys - a recent successful exploration well is helping to prolong the peak production period at Inpex’s 8.9 mtpa LNG project in Australia.

• More feed gas for Gorgon LNG - Chevron has announced plans to develop seven offshore gas fields, which will be tied into existing subsea infrastructure that connects to the 15 mtpa Gorgon LNG facility in Australia.

🦁 Africa

• Fire at Libya crude pipeline - its not been a good few weeks for Libya’s oil industry. A fire, which has been extinguished, disrupted flows from the Sirte basin to the Es Sider oil export terminal in the east of the country.

🌍 GEOPOLITICS & MACRO

• 50% chance of war in the Middle East - according to analysts at Fitch Solutions. Putting a number on something so complex and dynamic seems strange but the point is that the outlook is ain’t great. The region is on tenterhooks as it waits for Iran’s promised retaliation against Israel for various assassinations in recent weeks. The US has been beefing up its military presence in the region by sending jets and submarines in anticipation of things hotting up.

• OPEC+ output climbs on non-compliance - production from the group rose by 185 kb/d in July to 26.7 mmb/d as Saudi pumped more and inveterate quota breaker Iraq increased its volumes further. Iraq is now producing 250 kb/d higher than its agreed cap of 4 mmb/d. Wonder how long the other members will tolerate Iraqi transgressions before they start ignoring their own quotas?

• IEA downgrades 2025 oil demand forecast - the agency (which in my opinion has traded credibility for ideology in recent years) sees oil demand at 950k/d next year, a reduction of 30 kb/d from its forecast last month. In contrast, OPEC thinks demand will grow by 1.78 mmb/d in 2025. Who knows?

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• IRA crashes back down to earth - the FT has reported that $84bn (40%) of clean energy projects announced under the much-hyped IRA are facing delays or cancellation. The hesitation is being caused by high interest rates, global solar over capacity, slowing EV sales growth, and policy uncertainty ahead of the US presidential election. Even with the most generous government support, many of these projects can’t get off the ground…

• US wind power surpasses coal - for the first time wind has generated more power in a month than coal in the US. The milestone is more down to coal’s sharp decline than anything else which has been driven by a growth in gas power generation. You can’t replace baseload coal with intermittent wind.

🛢️ BOTTOM OF THE BARREL

This industry isn’t always for the faint hearted…Putting that fire out was someone’s job yesterday.

👋 BEFORE YOU GO 

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

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