16th August 2024

Your summer weekend is just around the corner so let’s wrap things up shall we? Here’s what’s been happening in the world of oil, gas, and energy:

• ⛵ A rogue crew and a sailing boat

• 👀 The world’s largest offshore platform

• 🤡 Californian clowns

• 🇮🇶 Iraq overhauls O&G contracts

• ➕ plus record upstream investment in Norway; an impending rig shortage?; Brazil’s bright future; a world-first carbon bond; more troubles for Orsted; inventories build: Dakota oil output falls, and plenty more.

Let’s dive in…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• California planning gasoline reserves mandate - Governor Gavin Newsom wants refiners to maintain minimum reserves of gasoline in an effort to prevent price spikes. If Newsom and his pals are so concerned about rising prices then they need look no further than their own fervently anti-O&G policy to find the culprit.

• Chevron reaches $550m settlement with Richmond - Chevron will pay the Richmond City Council the amount over 10 years instead of a new tax that the city had been planning for the 250 kb/d refinery. Meanwhile, California’s politicians moan about high gasoline prices.

• Shell greenlights Vito water flood project - the water injection project at the GoM asset aims to increase recoverable reserves by 60 mmboe when it starts in 2027.

• $775m to clean up orphaned oil & gas wells - the government is granting the money to enable the clean up of abandoned onshore wells which pose a risk to groundwater and create methane leaks. There are apparently over 100,000 orphaned oil and gas wells across the country.

• North Dakota output slips again - output fell by 22.5 kb/d in June to 1.176 mmb/d, the state’s Pipeline Authority said, marking a second straight monthly decline.

• Surprise build in crude inventories - US oil stocks climbed by 1.4 mmbbls last week, compared with an expected 2.2 mmbbls draw. The build broke a run of six consecutive weekly declines.

🏰 Europe

• A record year for Norwegian upstream investment - capex is set to hit $24bn offshore Norway in 2024 thanks to new field developments and rising costs. The future is bright for the Norwegian O&G sector. Not so much just across the border in the UK North Sea where no one is investing a penny thanks to a punitive tax regime.

• SLB expanding in Russia - unlike many of its peers which have left the country entirely, the services giant is growing its business in Russia, signing new contracts and delivering equipment. It’s not believed to be breaking any sanctions.

• Advance gas sells $1bn fleet of large gas ships - BW LPG, a Singapore based shipping company, will acquire the 12 VLGC which are used to haul liquefied petroleum gases such as propane and butane.

🕌 The Middle East

• Iraq shifting to PSC upstream contracts - in an attempt to attract more international investment, Iraq is a making a major change to its contracts with foreign O&G companies. Iraq has long operated using technical service contracts which offer a flat rate for every barrel of oil produced after reimbursing costs. These generally pay foreign investors less than Production Sharing Contracts which give operators a share of overall profits.

⛩️ Asia & Oceania

• China completes build of world’s largest oil platform - the structure, which will be used at the Marjan field in Saudi Arabia, is 24 stories high, weighs over 17,000 tons, and has a deck the size of 15 basketball courts. Now to the small task of moving the thing 6,400 natural miles to its new home in Saudi waters…

🦁 Africa

• Nigeria and Equatorial Guinea to build $25bn gas pipeline - the pipeline will have a 30 bcmpa capacity and will be operational in God knows when. It will deliver gas from Nigeria to EG’s LNG facility at Punta Europa.

🗿 Central & South America

• Brazil to hit 5 mmb/d by 2030 - making it the world’s 5th largest oil producer. This represents an increase of 40% from current levels and is being driven by a series of large projects due onstream in the Santos basin pre-salt province over the next few years. Happy days in the Brazilian O&G sector.

• Peru, anyone? - Perupetro has launched a bid process for a pair of onshore blocks as the country aims to stave off declining oil production.

🌍 GEOPOLITICS & MACRO

• A sailing boat and a team of 6 - a report by the Wall Street Journal claims that the sabotage of the Nord Stream II pipeline was carried out buy a motley crew of rogue Ukrainians on a sailing boat. Zelensky apparently initially approved the mission, and then called it off, but it went ahead anyway. Are we really supposed to believe that account of the most audacious act of industrial sabotage…?

• Calls for a new election in Venezuela - the US, Brazil, and Colombia want Venezuela to re-run its presidential election. Venezuela's electoral authority claimed Maduro won 51% of the vote but didn’t disclose the full vote tallies. The opposition, meanwhile, says it received 67% of the vote. Now maths ain’t my strong point but I’m pretty sure both can’t be right.

• Iran’s central bank hit by cyber attack - banks across the country have been disrupted by the major attack which comes just as tensions are sky high in anticipation of an Iranian retaliation against Israel, and new cease Israel / Hamas ceasefire talks get underway in Qatar.

• An impending drilling rig shortage - the CEO of Borr Drilling has warned that newbuild rigs will soon need to be ordered as the global fleet of rigs ages and retires. Almost no new jack-up drilling rigs have been ordered in the past decade and 30% of the existing global fleet is more than 35 years old. Rig bottleneck incoming?

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• World’s first carbon bond to reforest the Amazon - investors in the $225m bond, issued by the World Bank, will receive returns generated by selling carbon credits from the reforestation projects. Believe it or not, I’m a big fan of carbon markets in principle (yes, they’re still flawed in many ways), and reforestation is objectively a good thing, no matter your views on CO2 emissions. Don’t tell anyone, but I even spent a couple of years working in the reforestation carbon space because I believe it’s the perfect complement to oil & gas.

• More losses and delays for Orsted - the beleaguered offshore wind developer’s shares fell 9% after announcing big losses and a delay to its large Rhode Island offshore wind project. When are we all going to admit that offshore wind is an expensive failed experiment?

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO 

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

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