18th December 2023

Goooood morning everyone. Final week before the holidays. You got this.

Here’s what hit the energy wires over the weekend:

• 👍 Musk speaks some sense

• 😦 “Do better”, Chevron tells staff 

• 🇯🇵 Japan buys US gas producer

• 📉 Speculators’ record bearish oil bets

• ➕ plus a new chief in Kuwait; Philippines wants to explore in the South China Sea; oil rig count slides; Suriname’s bright future.

Here goes…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Tokyo Gas buys Rockcliff Energy for $2.7bn - Japan’s largest utility said the volumes will initially be sold in the domestic US market but didn’t rule out the possibility of sending the gas to Japan as LNG in the future. Resource-poor Japan is the world’s second largest LNG importer and so acquiring upstream supply in one of the world’s most prolific gas producing regions is a sound move to ensure security of supply.

• Callon Petroleum next in line for sale? - the Permian producer, which is worth ~$2.3bn, is considering selling itself. Most rumors about other recent shale M&A activity have been proven correct so I’d wager that this too shall come to pass.

• “Do better” - was what Chevron’s CFO had to say to employees in a recent staff email. Chevron’s share price is down 16% this year and “upstream production, refinery availability and carbon abatement projects are all below plan…Chevron is next-to-last among our peers in improving earnings”. Bah humbug.

• Oil rig count slides - OPEC will be pleased to see that the US oil rig fleet fell by 2 rigs last week to 501. Despite the count being 119 lower than this time last year, improved productivity has pushed US crude output to record highs in recent weeks.

🏰 Europe

• Shell sells German refinery stake - Prax Group is buying the 37.5% interest in the PCK Schwedt refinery for an undisclosed sum. The sale is part of Shell’s efforts to shed non-core refining assets and also relieves it of the headache of being partnered in an asset that’s majority owned by Russia’s sanctioned Rosneft.

• Serica lands $525m debt facility - the UK North Sea indy said the loan will be used to fund capex and make more acquisitions.

• Shetland Gas Plant back onstream - Total’s important gas facility in Scotland had been offline for 13 days after a malfunction.

🕌 The Middle East

• ADNOC buys $3.6bn Fertiglobe stake - the deal will increase ADNOC’s shareholding in the ammonia producer to 86%, with the remaining shares listed on the Abu Dhabi stock market. ADNOC is making a push to diversify beyond its traditional oil & gas business.

⛩️ Asia & Oceania

• Philippines keen to start exploration in South China Sea - the country’s president said the resource-rich waterway is crucial for helping it meet its energy needs, but the deadlock with China (which claims almost all of the waters) is holding up progress.

• China’s deep sea drilling dreams - trials are beginning for the country’s first ultra-deepwater drilling ship. The vessel is capable of drilling at depths of over 10,000 meters and is an important step in unlocking China’s deep sea O&G exploration ambitions.

• Santos gets the green light for Barossa drilling - regulators approved a new drilling plan for the $4.3bn gas development offshore Australia. The project has been delayed by various disputes with indigenous peoples, one of which is still holding up the progress of an export pipeline.

🦁 Africa

• Deadly blast at Guinea’s only oil terminal - the explosion in the country’s capital of Conakry killed 8 people and injured dozens more. It’s unclear what caused the tragedy.

• “Italy is ready to invest in Africa” - according to Eni’s boss Claudio Descalzi. Investment is need to unlock energy for economic development and to help tackle migration (a particularly sensitive issue in Italy at the moment with large numbers of migrants arriving across the Med in recent months and years), he said. Eni is already a major investor in Africa in Egypt, Ivory Coast, Mozambique, Nigeria and several other countries.

🗿 Central & South America

• Suriname’s bright future - heavyweights Total, Shell, QatarEnergy, and Petronas have signed PSCs with Suriname for three offshore blocks. Excitement is running high for the South American country’s nascent offshore oil patch which is adjacent to the prolific oil-producing waters offshore Guyana.

🌍 GEOPOLITICS & MACRO

• Kuwait’s Emir Sheikh Nawaf dies - the 86-year old only came to power in the emirate 3 years ago but had been suffering from various health problems. Crown Prince Sheikh Meshal, who at 83 is no spring chicken either, will take the reins. Meanwhile, the younger generation will be jostling for power as the new head man goes about naming his succession plans.

• Bullish bets on oil fall to record lows - net long oil positions held by fund managers fell last week to their lowest levels since records started in 2011 as speculators fear an oil oversupply will keep downwards pressure on prices.

• Live by the sword, die by the sword - the fund of renowned french oil trader, Pierre Andurand, has lost 54% of its value this year after being wrong-footed by the oil price decline. He’s been making bank over the past few years though so don’t worry, he won’t be going hungry.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Musk speaks some sense - you might not agree with everything he says, but he’s bang on about this: “We should not demonise oil and gas in the medium term…Climate change alarm is exaggerated in the short term”. As one of the most influential people on the planet, and head of the largest EV company, his words are a very welcome voice of reason to the often hysterical energy / climate debate.

🛢️ BOTTOM OF THE BARREL

As rude as I sometimes am about solar energy, the sheer abundance of the stuff makes it worth pursuing.

In just 90 minutes, enough solar energy hits the earth to meet humanity’s entire energy needs for a year.

We ‘just’ need to find a sensible way of harnessing it.

Energy realities…

👋 BEFORE YOU GO 

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