17th November 2023

Oil sinks by 4% | Eni’s OPL 245 nightmare finally over | LNG: activists' next target | No transition without transmission

November 17, 2023

What’s up Both Barrels crew. Here are today’s highlights across all things oil, gas, and energy, without the hot air:

🔽 Oil sinks by 4%
🇳🇬 Eni’s OPL 245 nightmare finally over
🎯 LNG: activists’ next target
🔌 No transition without transmission
➕ plus artificial rain in India; O&G borrowing costs immune to ESG; Panama chokepoint premium.

Have a top weekend and see ya Monday.

As of 04:30 ET on 17/11/2023. N.B. prices for JKM LNG and uranium can be delayed by a day or two.

Oil prices had a rough day yesterday, falling by ~5% on bearish economic sentiment and rising crude stocks.

Brent ended up at ~$77/bbl, its lowest level since July, before recovering slightly this morning.

OPEC+ meets later this month in Vienna and I’ll eat my hat if they don’t announce an extension to output cuts well into next year.

A deeper cut isn’t out of the question either…

Those “$100/bbl by year end” calls aren’t looking too likely…

Key permit revoked for Port Arthur LNG - the emissions permit for Sempra’s under-construction 13.5 mtpa LNG export facility in Texas has been revoked by a judge who said the emissions limit was too generous. The impact on schedule and cost is not yet clear. The fast-expanding US LNG sector is increasingly becoming the target of environmental activists.
Galveston Bay reformer resuming ops - the Marathon-owned facility has been shut since May after a fire that killed an employee and damaged much of the refinery.
WhiteHawk’s Marcellus buy - the $54m acquisition from an undisclosed seller will double WhiteHawk’s mineral and royalty ownership in its existing 475,000 gross acre position.

BP divests Turkish downstream assets - the deal will give Vitol 770 gas stations and a stake in the Anadolu Tasfiyehanesi oil terminal. The terms weren’t disclosed. Flush with cash after a booming few years thanks to market volatility, commodity traders like Vitol are going on shopping sprees.

Panama bottleneck pushing up Asian LNG prices - the restriction on traffic through the canal is pushing up the costs of sending US LNG to Asia. Ships are either having to increase their journey by 10-12 days and go via the Cape of Good Hope or pay millions to jump the queue in Panama. Asian buyers must therefore cough up to offset these costs.

Nigeria withdraws $1.1bn claim against Eni - the long running dispute was related to alleged corruption in a 2011 deal for the OPL 245 oilfield. Nigeria claimed the proceeds from the sale were siphoned off by dodgy middlemen and politicians. In 2021, a Milan court acquitted Eni of wrongdoing.
Total’s Mozambique LNG targeted by activists - over 100 organisations including Greenpeace have written to financiers of the project urging them to withdraw their funding. No matter that the project represents a $20bn investment into the country and will act as a major boost to its economy for decades.
Ghana sweetening its fiscal regime - keen to attract more O&G investment, the West African country has agreed to a new “carefully calibrated, flexible and progressive scheme”. Ghana currently produces ~ 170kb/d of oil.

Western firms get moving in Venezuela - Chevron has begun supplying PDVSA with fuel after some sanctions against the country were lifted last month. And Vitol has reportedly chartered a supertanker to take crude from Venezuela to China. Meanwhile, the White House is paying close attention to ensure the Maduro government keeps up with its side of the deal.

O&G borrowing costs immune to ESG - a report by S&P has shown that efforts to reduce lending to the O&G industry have had almost no impact on its cost of capital. The “divest” campaign has long seemed futile as there will always be another less scrupulous financier somewhere to step in and fill the void left by any capital providers who’ve been hoodwinked by ESG.
Jordan & Israel’s energy-for-water deal is dead - the high-profile agreement, which would see Jordan supply Israel with solar energy in return for desalinated water, was supposed to be signed last month. “We will not sign it”, said Jordan’s deputy PM, citing Israel’s conflict in Gaza.
US sanctions more shipping companies - three firms in the UAE have been hit by penalties for violating the Russian oil price cap. Companies the US takes action against will have any US assets frozen and Americans will be barred from dealing with them.
Russia hits back at EU’s oil tanker inspection plan - “I’ll just remind you that all vessels, including Russian ones, have the right to free passage through the Baltic Straits,” said a Kremlin spokeswoman, “any actions that contradict this violate international law…And you know how dangerous that is”. Things could get fiery if the EU goes ahead with this plan...

No transition without transmission - Europe’s power industry body has warned the continent’s grids don’t have the capacity to handle the rapid increases in low-carbon electricity. BNEF estimates that in Europe there are 500GW of wind and solar projects waiting in a long queue for grid connection. Transmission, and the huge investments required to improve it, is a massively understated challenge with a wind and solar build out: there are hundreds of small projects, dotted all over the country, often far from demand centers. That requires a LOT of wiring.
India’s artificial rain plan to tackle air pollution - some of the country’s cities are currently suffering from severe air pollution and the government is drawing up plans for “cloud seeding” , i.e. using chemicals to stimulate rainfall, in a bid to fix the problem.

152 MILLION kilometers. That’s long enough to reach the sun. | Source: BNEF

What could possibly go wrong? | Source: BBC

Talk of transmission reminded me of this:

And I hope you all smile like Xi Jinping this weekend:

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