14th October 2024

Alright, alright, let’s get back to it. Here’s what happened over the weekend in the oil, gas, and energy world:

• 🚚 A major emerging theme in oil markets

• 🇺🇸 Boom times for US gas demand

• 🤡 Imports from North Korea…

• ⚖️ Exxon suing Netherlands

• ➕ plus Iraq falls in line; Eni’s FLNG funding; US slaps more sanctions on Iran; more Indian refinery investment; rig count reverses course; energy = prosperity.

Let’s take a look…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• EQT bullish on US gas demand - the county’s largest gas producer estimates domestic gas demand will grow by ~10 bcf/d (from ~ 70 bcf/d today) by 2030, largely driven by AI and data centers. Almost $50bn in new power generation is going to be needed to support this growth. AI will be powered by the US shale gas miracle.

• Rig count climbing - after a few weeks of decline, the oil rig count has changed course, rising by 2 last week to 481. Gas rigs fell by 1 to 101.

• Judge puts break on Kinder Morgan pipeline - the proposed Cumberland Project, a natural gas pipeline in Tennessee, is on pause after a judge withheld various approvals at the request of environmental groups.

• PetroChina gives up TransMountain usage rights - the company, which owns several upstream assets in Western Canada, will no longer be a committed shipper of oil in the pipeline and has assigned its rights to an unknown third party, for unknown reasons.

🏰 Europe

• Exxon suing the Dutch over Groningen closure - the Dutch government forced the premature closure of Europe’s largest gas fields last year over concerns gas production was causing local earthquakes. Exxon hasn’t disclosed how much it’s seeking but some estimates suggest there are still 450 bcm of gas reserves left in the ground.

🕌 The Middle East

• Iraq falling in line - serial OPEC quota breaker Iraq said it reduced its output by 260 kb/d in September to fall below its assigned limit of ~ 4 mmb/d. Iraq has promised to produce below its quota to make up for recent over-production.

• Contractors vying for ADNOC pipeline gig - five companies are in the running for a $700m contract to help the UAE’s gas pipeline network.

⛩️ Asia & Oceania

• Chennai Pet raising $3.3bn for new refinery - this is the latest in a spate of announcements coming from India about plans for new refineries as demand for fuels and petchems ramps up in the world’s most populous country.

🦁 Africa

• Eni attracts funding for $7bn Mozambique FLNG - the major said it has received plenty of interest from international investors to finance the floating LNG project, which will be very similar to Eni’s Coral FLNG plant which came onstream in 2022, also in Mozambique.

• Shelf Drilling bags two Nigeria contracts - the contracts for the jack-up rigs have a total value of $234m. One is for two years, the other for three.

🗿 Central & South America

• All quiet over here

🌍 GEOPOLITICS & MACRO

• Peak diesel in China - cheap natural gas is pushing Chinese trucking companies to rapidly shift their truck fleets from diesel to natural gas, with natural gas trucks making up 42% of heavy-duty truck sales in 2024, compared with just 9% in 2022. These gas trucks are estimated to displace ~200 kb/d of diesel demand in 2024. Watch this space - I expect this to be a major theme in the coming years.

• US slaps sanctions on Iranian tankers - in response to the recent Iranian missile attack on Israel. The US has been turning a blind eye to supposedly sanctioned Iranian crude exports anyway (to keep downwards pressure on oil prices), so I wouldn’t count on these new measures having a huge impact.

• Hedge funds rapidly switching their bets on oil - just a few weeks ago the net short position against crude was at its largest ever, now hedge funds have hurriedly unwound those positions at the fastest rate in 8 years for fear of getting caught out by a war in the Middle East. The only constant in oil markets is change.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• UK plans to import biomass from North Korea and Afghanistan - just when you thought the country’s energy policy couldn’t get any more deranged. The UK wants biomass to play an increasing role in its drive for “net-zero” and has laid out a strategy to import more of the stuff from abroad, including from Kim Jong Un’s DPRK…

• Chinese carbon prices hit record high - prices reached ~$15/ton as a looming deadline pushed buyers to snap up sufficient credits to cover their emissions. China’s carbon market covers 2,200 power utilities that are responsible for ~4.5 billion tons a year of CO2 emissions.

• Carbon prices causing “unbearable tension” - the CEO of Stellantis, the European car manufacturer that owns Maserati, Vauxhall, Citroën and many others, has warned that high carbon and energy costs in Europe are making it hard for his company to compete on the international stage.

• Southern hemisphere’s largest wind farm starts - the $4bn Golden Plains Wind Farm in Australia will eventually have a capacity of 1.3 GW with 215 turbines, each standing at 149m high.

🛢️ BOTTOM OF THE BARREL

Your regular reminder that energy abundance = prosperity…

and that climate hysteria doesn’t…

👋 BEFORE YOU GO

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

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