16th October 2024

All you need to know today in all things hydrocarbons:

• 📊 “A sizeable surplus” and other WEO tidbits

• 🥵 Iran’s oil off the hit list

• 🤖 Google going nuclear

• ✂️ OPEC trims demand forecast…again

• ➕ plus Nigeria blocks Shell sale; Exxon selling Bakken interests; space solar; big oil eyeing up Algeria; Petronas stands firm; Russia suing Shell; shake up at Neo; Aramco axes refinery plan; Perenco upbeat in Colombia, and barrels more.

Have a good one.

📈 THE NUMBERS

After tumbling by ~4% yesterday when Israel said it wouldn’t go after Iranian oil infrastructure, oil prices have stabilized today.

🗞️ WELL-HEADLINES

 🗽 North America

• Exxon looking for Bakken buyers - Exxon said the assets for sale include “137 operated wells and 676 non-operated and royalty wells across 49,000 net acres in North Dakota”, which are expected to be worth ~$500m. The supermajor is looking to clean up its portfolio after its $60bn Pioneer purchase.

• Nabors acquires Parker Wellbore - the deal for the Houston-based drilling services company is worth $472m, including debt. Parker Wellbore specializes in tubulars, drilling rigs, and maintenance services in North America.

• Canadian gas glut - producers are hoping the incoming opening of the Canada LNG project next year will help clear the severe gas oversupply in Canada that has recently sent Alberta gas prices down to $0.05/MMBtu.

🏰 Europe

• P66 selling Coop Mineraloel stake for $1.2bn - it’s selling the 49% stake to its JV partner in the business that operates 324 retail sites and petrol stations across Switzerland.

• Russian wants a billion in damages from Shell - prosecutors have not set out the reasons for the claim but it’s likely related to Shell’s exit from the country and its interests in the Sakhalin-2 JV following Russia’s invasion of Ukraine.

• Woodside dropping London listing - the Aussie firm is deslisting from the UK stock exchange following a review of its “current listing structure”. It will remain listed in Australia and on the NYSE.

• Shake up at Neo - the CEO and CTO are both stepping down from their positions at the Hitec-backed UK North Sea indy. The chairman and other board members have also been replaced.

• Deltic shares down by 30% CEO exits - Graham Swindells has abruptly resigned for undisclosed reasons after 11 years at the company.

🕌 The Middle East

• Aramco shelves major Saudi refinery - the NOC had planned to build a 400 kb/d refinery and chemical plant at Ras Al Khair on the Gulf coast but has opted to focus its midstream investments on Asia where the demand is far greater.

⛩️ Asia & Oceania

• Petronas not backing down in the South China Sea - Malaysia’s PM reiterated that the country’s NOC would keep exploring in the disputed waters, despite China kicking up a fuss. The sea is estimated to hold over 11 bnbbls of oil reserves and 190 tcf of gas. Plenty to fight over.

• Singapore and South Korea join forces to buy LNG - both Asian nations are heavily dependent on gas imports and hope that the partnership will increase their joint leverage as buyers to extract better pricing and terms.

• Hanwha increases Dyna-Mac offer - Hanwha said that its increased offer of S$0.67/share (implying a market cap of ~$780m) for the Singaporean-based FPSO construction company was its “final offer”.

🦁 Africa

• Nigeria rejects Shell sale - the government has blocked Shell’s proposed $1.3bn sale of its onshore oilfields to Renaissance group because it says the buyer is not qualified to manage the assets. Ooof, that’s a setback.

• Big oil eyeing up Algeria - Exxon, Chevron, Eni, Sinopec, and others are expected to take part in Algeria’s soon-to-be-announced licencing round. Algeria is a member of OPEC and also a large gas supplier to Europe, and is keen to ramp up gas exports to Europe to fill the void left by Russia.

🗿 Central & South America

• Shell kicks off Dragon survey - the geophysical and geotechnical surveys are assessing the potential at the company’s proposed Dragon field development offshore Venezuela.

• First oil from Maria - Petrobras has started production from the Jubarte field in the Parque das Baleias cluster in Brazil’s prolific Campos basin. The volumes are being developed via 16 wells to the 100 kb/d capacity Maria Quiteria FPSO.

• Perenco has high hopes in Colombia - the company has completed a three-well development drilling campaign at the onshore Paravare and Chaparrito fields where a “large quantity of oil has been discovered”.

🌍 GEOPOLITICS & MACRO

• Iran’s oil facilities off Israel’s hit list - Israel’s PM said that he’d target Iran’s military sites, rather than nuclear or oil facilities, in retaliation for Iran’s recent missile attack. The US, alongside Arab states, have been pressing Israel hard to leave oil out of it, in fear of the inevitable upward spiral in oil prices that such an attack, and subsequent action, would cause.

• OPEC trims oil demand…again - for the third consecutive month, the cartel has reduced its forecast for oil demand growth in 2024 (down by 100 kb/d to 1.9 mmb/d) and in 2025 (down by 100 kb/d to 1.6 mmb/d). The group cited weakening consumption in China as the key driver in the reduction.

• “A sizeable surplus” - is how the IEA sees oil markets next year, with non-OPEC producers like USA, Brazil, Guyana, and Canada adding a combined ~ 1.5 mmb/d to supply this year and next. Meanwhile, the IEA sees demand growth this year at 826 kb/d, a slight downgrade on previous forecasts, thanks mainly to a slowdown in China. Throw in >5mmb/d of OPEC spare capacity and I agree, it’s hard to be too bullish oil right now.

• Some other IEA World Energy Outlook highlights - to be taken with a whole handful of salt:

  • We’re entering the “Age of Electricity” apparently.

  • Global electricity demand is booming and is set to add the equivalent of Japan’s total power demand every year until 2035.

  • Low-emissions energy sources to generate more than half of the world’s electricity by 2030.

  • Global oil demand to peak by 2030 at ~105 mmb/d. Coal and gas to also peak before 2030.

  • 750 millions still lack access to electricity, and 2 billion don’t have clean cooking fuels.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Google going nuclear - the tech giant has signed the world's first corporate agreement to buy power from multiple small modular nuclear reactors to meet electricity demand for AI. Google follows in the footsteps of Amazon and Microsoft who have also recently made deals to secure nuclear power for their data centers.

• Space solar - yeah I know that all solar is from space, but the co-founder of the investing app Robinhood has launched a new company that plans to build satellites that will use lasers to transmit power to stations on Earth. The things people will do to avoid building nuclear…

• China’s giant floating wind turbine - a Chinese company has unveiled what it claims is the biggest and most powerful floating offshore wind turbine with a capacity of 20MW and a diameter of 260 meters. Floating offshore wind makes even less sense than bog standard offshore wind as it’s more expensive and rife with technical challenges.

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO

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

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