18th October 2023

Good morning ladies and gents. Welcome back to Both Barrels. Today’s highlights:

• 👎 The biggest domestic policy blunder of the century

• 😘 Chesapeake courts Southwestern

• 🚢 Another mega LNG deal for Qatar

• 💣 Europe’s gas demand destruction

• ➕ plenty more. Let’s get to it…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Chesapeake courts Southwestern - the US gas producer is in talks to acquire its rival in a deal that could be worth ~$12bn, creating the US’s largest gas company. Southwestern’s share price jumped 8% on the news. It’s not just the shale oil companies having all the M&A fun.

• US crude stocks resume their decline - after last week’s huge ~12 mmbbls build, US crude inventories climbed by 4.4 mmbbls this week, according to the API.

🏰 Europe

• Shell keeping it boring - when asked about Exxon’s recent buy of Pioneer, Shell’s CEO said that "I hope we are accused over the next year of being boring". Separately, in a discussion with staff about the company’s climate plans, he reiterated a commitment to net-zero by 2050, but "what has changed is the pathway we're going to get there…we've had to make some tough choices... around which renewable projects we will pursue and which ones we will not”.

• Too cold for German LNG? - Germany’s LNG import terminals may lose as much as 30% of their capacity this winter due to the cold seawater they’re floating in. The facilities usually use “warm” seawater to help regas the LNG but if the seawater is too cold, this isn’t an option. Poor Germany can’t catch a break these days.

• Tyra redevelopment - the delayed start of the $3bn redevelopment of Denmark’s largest gasfield into 2024 will enable production to ramp up quicker, says operator Total.

🕌 The Middle East

• Another big bucks LNG deal for Qatar - Shell is the latest IOC to sign a mega supply deal with LNG from Qatar’s giant North Field expansion project. The deal is on the same headline terms as the one Total announced last week: 3.5 mtpa for the next 27 years. Europe rightly sees a long future for natural gas.

• ADNOC gets in on the LNG act - Abu Dhabi’s ADNOC signed a long-term LNG supply deal with Japan’s JERA worth ~$700m. Details are sparse, but ADNOC said the agreement takes the total value of its LNG supply deals signed since March to a cool ~$12bn.

⛩️ Asia & Oceania

• Chevron strikes breakthrough? - this story has been going back and forth for weeks now so who knows if this is finally a resolution, but Chevron reached an agreement with unions at its Gorgon and Wheatstone LNG plants in Australia to avert strikes. Let’s see…

🦁 Africa

• Revitalizing Libya - the oil-wealthy but stability-poor country has ambitious plans to double it’s oil production to 2 mmb/d by 2030. Libya’s output has been rocked by conflict over the past decade and hasn’t seen 2 mmb/d since the 70s.

• Speaking of Libya - Equinor signed an MoU with Libya’s NOC for some offshore exploration and training of young people.

🗿 Central & South America

• More Guyana investment incoming - Exxon is targeting FID in 2024 for its Whiptail offshore oilfield in Guyana. The project will be the Exxon-led consortium’s sixth in the booming new oil province and bring the group’s output to over 1.2 mmb/d when the project starts up in 2027.

• Dragon gets the go ahead - US regulators granted a sanctions exemption for the development of the 4.2 tcf offshore Venezuelan Dragon gasfield. The project is jointly owned by Venezuela and Trinidad & Tobago.

🌍 GEOPOLITICS & MACRO

• Biden heads to Israel - the US president is on his way to meet with Israeli leaders to offer US support, work to deescalate the conflict, and push for humanitarian aid to Gaza. Meanwhile, hundreds have tragically been reported killed in a blast at a hospital in Gaza. Hamas blames an Israeli airstrike, Israel blames a misfiring Hamas rocket. There are only losers in war.

• Europe’s unwanted gas demand destruction - the energy crisis of last year permanently destroyed some European gas demand, according to Vitol’s CEO. Industries across the continent couldn’t afford the high energy prices, with many businesses closing down or being moved abroad. Europe may be reducing its hydrocarbon demand, but certainly not in the way it intended.

• “We can afford two wars” - in a TV interview, US Treasury Secretary said that the US could afford to fund both Israel and Ukraine in their respective conflicts. I’m not sure many American taxpayers would agree, especially with national debt spiraling out of control.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Here we go again - Germany fired up an idle coal plant to help meet power demand in this winter’s first cold snap. The dirty lignite plant has a capacity of 0.5GW. In April, the brainboxes shut down 4GW of clean, reliable nuclear power. With no wind or solar generation, yesterday Germany’s grid was dirtier than India’s. And winter is only just getting started…Oh, and German industry is on its knees due to sky high power prices. All this after ~$500 billion invested into “renewables”. Is Energiewende the biggest domestic policy blunder of the 21st Century?

• For once we agree, Jennifer - US Energy Secretary commented on the importance of hydrogen for decarbonising “hard to abate” sectors like heavy industry and shipping. Hydrogen has huge potential but is very energy inefficient to produce so only really makes sense in an era of abundant, clean, affordable power. I.e. definitely not right now.

• Clown corner - protesters wearing clothes made from petrochemicals and fed on food enabled by oil disrupted the Energy Intelligence Forum (formerly known as Oil & Money) by blocking access to the venue. The conference is taking place in London this week and is attended by many industry fat cats.

🛢️ BOTTOM OF THE BARREL

These socks? Yes please.

This car? No thanks.

👋 BEFORE YOU GO 

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