19th February 2024

Rise and shine, here’s what hit the wires over the weekend:

• 🤡 “If you’re not green, you’re not wanted”

• 👉 Israel dunnit, says Iran

• 🙏 RIP Navalny

• 🖕 Russia’s impotent energy weapon

• ➕ plus refineries not invited to M&A party; rig count falls; the EU’s true colors; gas drillers easing off; sinking cargo ship in the Red Sea; first oil in Somalia.

Let’s go.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Refiners not invited to the M&A party - while upstream is undergoing merger mania, the US refining sector is being neglected by investors. Refineries up for sale are struggling to sell and values are ~30% down from their 2008 peak. Energy transition concerns and the old age of many of these facilities are deterring buyers.

• Gas drillers finally easing off - as US nat gas prices reach multi-decade lows, gas drillers including Comstock, Antero, and EQT all announced plans to reduce drilling activity during earnings calls. Gas prices have been hammered by high production (much of it is associated gas from the Permian) and an El Niño-induced mild winter that has reduced demand.

• Rig count edges down - the number of operational oil rigs in the US fell by 2 last week to 497. The count has been bobbing up and down around 500 since September but increased efficiencies have meant that US oil output remains at record highs despite the count being 110 lower than a year ago.

🏰 Europe

• Russia’s impotent energy weapon - the Russian president has said it would take just one week to start gas flows to Europe through the Nord Stream pipeline that wasn’t destroyed. With gas storage at record highs, alternative supply sources, falling gas prices, and mild weather, Europe ain’t interested. Sorry Putin, but your energy weapon is firing blanks.

• Former Petrofac execs in the dock- two former employees are due in court in London this week, accused of paying over $30m in bribes during 2012-2018 to help secure contracts for the company in the UAE. Petrofac is currently teetering on the edge of bankruptcy so this is the last thing it needs.

• Macquarie and Federated Hermes selling down UK gas network - the two shareholders are both looking to sell ~5% stakes in Cadent, the UK’s largest gas network operator, which would be worth ~$1.6 bn combined.

🕌 The Middle East

• Tamar expansion plans approved - the partners at Israel’s giant Tamar gas field have approved plans to increase the offshore field’s capacity from 1 bcf/d to 1.6 bcf/d. The field, which is a major energy source for Israel but also Egypt and Jordan, is operated by Chevron.

• Aramco lining up bond issuance - the CFO said Aramco will likely issue 50-year bonds this year. He didn’t reveal how much or at what sort of price. Aramco last tapped global debt markets in 2021, when it raised $6bn from the sale of an Islamic bond.

🦁 Africa

• Somalia to soon become an oil producer - the impoverished east African country will produce oil for the first time in its history later this year, according to its petroleum minister. The project is being developed by US-based Coastline Exploration.

🌍 GEOPOLITICS & MACRO

• Iran blames Israel for pipeline attack - Iranian officials are pointing the finger at long-time foe Israel for the massive explosions at one of Iran’s major gas pipelines last week. That’s probably a safe bet, to be fair.

• Democrat senator breaks rank to oppose Biden’s LNG ban - Senator Michael Bennet called the White House’s LNG approval ban “short-sighted”, saying LNG was a key tool to replace Russian gas in Europe. The Democrat-controlled Senate will soon vote on legislation that would block Biden’s plans and it seems there’s enough dissent among the ranks to make things awkward for the president.

• Russian opposition activist, Alexei Navalny, dies (murdered) in prison - he was a thorn in Putin’s side for years due to his vocal criticism of the corruption and “gangsters” among Russia’s ruling elite. Back in 2020 Navalny was poisoned on an airplane but survived thanks to the work of German doctors. He returned to Russia to keep fighting his cause but was arrested on arrival and remained imprisoned until the Kremlin finally finished the job on Friday. Few had bigger cojones than that man. RIP.

• Sinking cargo ship in the Red Sea - the Houthis are still at it. Crew have abandoned the UK-registered ship after it was attacked off the coast of Yemen.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• “If you’re not green, you’re not wanted” - this is what a top European Central Bank official told staff in an internal meeting…The level of narrow-minded, cult-like, ideological behavior when it comes to energy and climate among some of the world’s leading institutions is nuts. A reminder that the ECB’s main goal is to keep eurozone prices stable, not preach about climate.

• EU urges France to raise renewables target - despite France having one of the lowest carbon grids in Europe thanks to its nuclear fleet, it is still being lectured by the EU commission to increase its renewable target or face consequences. Wait, I thought decarbonisation was the goal…? What a farce. The EU reveals its true colors.

• Battery warehouse on fire - over 900 tons of lithium batteries have gone up in flames in France. The flammability of these batteries has been gaining attention recently after a series of incidents including a fire on a ship carrying EVs, and GM recently recalling thousands of Chevy Bolts due to fire risk.

• Exxon undeterred by lithium price crash - the price of lithium has fallen by ~80% since its 2022 highs but Exxon is still pushing ahead with plans to produce the key battery mineral, according to a senior exec. The company says it has “the balance sheet to weather price cycles” and wants to be a top 10 lithium producer by 2030.

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO 

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