18th December 2024

Morning girls and boys. This is Both Barrels with all that’s going on in the world of oil, gas, and energy:

• 📖 A tale of two provinces

• 🤡 LNG nonsense

• ⬅️ Climate backtracking

• ⚫ US power outages

• ➕ plus Shell returning to Suriname; Kosmos abandons Tullow; rough times for Russian tankers; India’s refining boom; Wood Middle East payday; Constellation wins big in Brazil; UK’s “unprecedented” grid investments; and barrels more.

Let’s go…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• The DoE’s LNG nonsense - a long awaited report from the US Department of Energy has urged caution on new LNG export projects, claiming”unfettered” LNG exports would raise domestic gas prices and harm global climate goals. What a load of rubbish. US gas producers have been shutting in gas wells amid an overwhelming gas glut and negative prices, and nothing has done more to reduce global emissions than replacing coal with gas in power generation.

🏰 Europe

• Boom time in Norway - O&G companies in Norway are planning a record ~$25bn of investment in 2025, which includes the drilling of 45 exploration wells. Norway is Europe’s largest oil & gas producer with over 4 mmboe/d of output.

• “Uninvestable” - meanwhile, just across the maritime border, is the UK, which INEOS chairman has said is now “uninvestable” due to the new punitive tax regime. “Basically we’ll try to harvest the assets as best we can and focus elsewhere,” he said. The comparison between the UK and Norway is stark evidence of the destructive power of ignorant politics.

• Sunken tankers trigger state of emergency - a third Russian tanker is in trouble in the Black Sea and oil is starting to wash up along Russia’s Black Sea coast. All three of the beleaguered tankers are reported to be over 50 years old.

• EU threatens to board Russian tankers - following new sanctions that restrict insurance for Russia’s “shadow fleet” (unregulated tankers used by Russia to evade sanctions), the EU has warned that the tankers will be boarded if they are unable to provide proof of insurance.

🕌 The Middle East

• Wood’s 2024 Middle East payday - the services company announced it had won multiple strategic contracts worth a combined $920m across the Middle East this year.

⛩️ Asia & Oceania

• More investments into Indian refining - Bharat Petroleum, the country’s second largest refiner has revealed plans to increase its refining capacity by ~200 kb/d to ~900 kb/d by 2028. Demand for oil production and petchems is booming in the the world’s most populous nation and this year has seen a series of new investment plans to meet that demand.

• OMV cancels New Zealand E&P sale - the company had been trying to sell the Kiwi upstream assets alongside its Malaysian assets, but the Malaysia assets were sold separately to Total earlier this year.

• Japan searches for more Asian E&P - JOGMEC has commissioned a study to evaluate acquiring oil and gas assets in Indonesia and Malaysia that can supply hydrocarbons to resource-poor Japan.

🦁 Africa

• Kosmos backs away from Tullow - the two struggling Africa-focused indies had been in merger talks but the discussions are now on ice after Kosmos said it would not make an offer. Tullow’s share price fell by 10% on the news, Kosmos’ rose by 10%.

🗿 Central & South America

• Shell returns to Suriname - after a disappointing drilling campaign in 2022, Shell is resuming exploration efforts in the South American country next year and has lined up four exploration wells at offshore Block 65. Suriname is neighbours with the prolific Guyana but is yet to produce any oil or gas.

• Talos sells 30% Zama stake - Zamajal has acquired the interest in the offshore Mexico oilfield development for $83m, $33m of which will be paid upon first oil at the field. Zama holds an estimated 600-800 mmboe of resources.

• Constellation wins big in Brazil - the drilling contractor has won a contract with Petrobras worth $528m over nearly three years for its Amaralina Star drillship, which equates to a day rate of $404,700. Puts your holiday car rental in perspective doesn’t it.

🌍 GEOPOLITICS & MACRO

• OPEC wary of Trump fueled US output growth - as the cartel grapples with controlling the oil market and choking back supply, the threat of rising US oil production looms under a “drill baby drill” president, possibly setting the stage for a new fight for market share. 2024 is not 2014 though. The days of wild US shale growth are behind us. And while discipline has never been US indies’ strong suit, it’s hard to see activity ramping up substantially in the coming years without higher oil prices, no matter who is in the White House.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Canada delays net zero target by 15 years - another day, another roll back of arbitrary impossible climate targets. Canada is now hoping to get to net-zero power by 2050. Expect many more similar announcements from governments around the world in the coming years as they admit their baseless goals were never feasible. You can only outrun reality for so long.

• Half US at risk of power shortfall - the US power regulator has warned that large parts of the country could see outages and power conservation measures within a decade due to “demand growth like we haven’t seen in decades,” and insufficient investment into new generation capacity and transmission.

• £35bn UK grid upgrade - National Grid, the UK’s grid operator, said it would invest the “unprecedented” sums over the next 5 years into upgrades and new generation capacity to help “meet the UK’s ambitious climate goals”. I wonder who will end up paying for that…

• Equinor axes US floating wind plans - the planned 2GW floating project in California has been “deprioritized”. That’s code for “we finally realized it was a furnace for shareholder value”.

• Iran’s energy crisis - the country has ordered schools and government departments to temporarily close due to a shortage of power generation and fuel amid a freezing winter. Remarkable when you remember that Iran has the world’s largest reserves of natural gas.

🛢️ BOTTOM OF THE BARREL

The average Indian uses ~1/10th of the amount of energy as the average American.

As India and it’s 1.4 billion people become richer, their demand for energy is going to skyrocket. And it isn’t going to be met by wind turbines.

👋 BEFORE YOU GO

Any feedback, requests, terrible jokes? Please just ping a reply to this email and let rip. We read every word. 

Oh and if you could share us with your pals who might like a drop of us, then we’d be very happy.

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

Was this forwarded to you? Both Barrels is a concise and irreverent oil, gas, and energy briefing, delivered to you daily. It’s free to subscribe.