16th November 2023

Good morning team. This is Both Barrels. Here’s what hit the wires today in oil, gas, and energy:

• 🙏 When Joe met Xi

• 🇺🇸 US vows to clamp down on Iranian crude

• 🛑 EU getting strict on methane

• 🇮🇩 Exxon’s $15bn Indonesia play

• ➕ plus UK caves to wind lobby; Karoon enters US GoM; crude socks swelling.

Let’s go.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Karoon Energy’s $720m US expansion - the Australian indy has acquired stakes in various offshore GoM assets from LLOG Exploration. The deal includes a stake in the world’s best named oilfield: Who Dat.

• Court cases stacking up against Venture - Orlen has become the latest European LNG buyer to file a lawsuit against the Calcasieu Pass operator for not supplying contracted LNG cargoes. EU buyers say Venture has sold over 200 cargoes into the spot market, where prices are higher, instead of meeting contractual obligations. Grab the popcorn, this spat is going to get feisty.

• EIA confirms large crude stocks build - two reports in one this week after last week’s was delayed. The EIA estimates stocks have risen by 17.5 mmbbls over the last two weeks. That’s a lot, and will no doubt be contributing to downwards pressure on oil prices.

🏰 Europe

• Serbia loosens Russia’s gas grip - the Eastern European country has signed a gas supply deal with Azerbaijan for 400 mcmpa, which is ~15% of its total gas demand. In the past, Serbia has been almost entirely dependent on Russia for gas.

🕌 The Middle East

• Al-Zour still out of action - KIPIC is working to restore operations at the giant 615 kb/d refinery in Kuwait after a “sudden interruption” led to a malfunction on the weekend. The restart is expected to take 10 days.

• Oman LNG resuming operations - a “technical defect” had caused an unexpected outage at the 7.6 mtpa facility. Initially the severity of the problem was unclear but it seems to be minor.

⛩️ Asia & Oceania

• Exxon’s $15bn Indonesia investment - the plans include building a petrochemical plant and the largest CCS facility in South East Asia.

• Aussie court holds up Barossa pipeline - indigenous groups claim the pipeline will disturb burial grounds and underwater art. A judge said Santos can start work on part of the pipeline at the $3.6bn development but not the section that goes through the subsea Lourve.

🗿 Central & South America

• Venezuela pushing ahead with contested referendum - the country is holding a vote over whether it should claim rights to the oil rich Esequiba territory that is contested with neighboring Guyana. Guyana has asked the UN to block the vote but it seems Caracas couldn’t care less.

🌍 GEOPOLITICS & MACRO

• When Joe met Xi - it was all going so well until Biden said he considered Xi a “dictator”. Besides that small blip, the get-together has been deemed positive, with the two heavyweights agreeing to resume military communications and stem the flow of Chinese fentanyl into the US. As expected, they didn’t quite kiss and make up, but small steps in the right direction.

• US determined to stem Iranian oil flow - perhaps emboldened by lower crude prices, a White House advisor said the US will clamp down on Iranian oil exports. “Those numbers will come down”, he said, referring to the additional ~500 kb/d of Iranian exports that have reached global markets in the past several months.

• Meanwhile, Iran builds up its enriched uranium - a report from the International Atomic Energy Agency said Iran is increasing its stockpiles of enriched uranium and is still not cooperating with inspectors. Iran denies it wants to make a nuclear bomb. Sure.

• Oil’s “villain” label slowing the transition - Exxon’s CEO said at the APEC summit in San Francisco that “solutions to climate change have been too focused on reducing supply…That’s a recipe for human hardship and a poorer world.” Couldn’t agree more, Darren. He also reiterated Exxon’s commitment to the environment: “I’m a father and grandfather – who cares about his family, their quality of life, and their futures…Which means I care very much about our environment and the health of our planet.”

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• The EU tightens up methane rules - from 2030 there will be a (yet to be defined) limit on methane emissions associated with oil & gas imports into the EU. The agreement will also ban almost all venting and flaring across the bloc. Alternatively, the EU could put some effort into boosting domestic gas production, which has 8x less methane emissions than imported gas…

• UK caves to wind lobby pressure - as widely expected, the government will increase the subsidies offered to future offshore wind projects by 66% after its last auction was a flop. For years wind has wrongly claimed to be the cheapest form of power generation and now, at least, that illusion has fallen apart. Not great news for UK bill-payers though who will keep having to fund this failed experiment.

🛢️ BOTTOM OF THE BARREL

😂😂😂😂

In case you needed a reminder of why Saudi needs high oil prices:

👋 BEFORE YOU GO 

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