18th November 2024

Morning, morning. I trust you had a cracking weekend. Here’s what’s been happening in all things oil, gas, and energy:

• 😎 Meet the based new US Energy Secretary

• 💣 Major escalation in Ukraine

• 🏢 Fighting entropy

• 🛑 Russia halts Austrian gas supply

• ➕ plus Canada wants more US crude pipelines; rig count falls slightly; a new Russia / China gas pipeline; blackouts in Iran; China EV sales strong; offshore wind in trouble; and barrels more.

Let’s take a look…

📈 THE NUMBERS

Oil prices crept up on escalating tensions in Ukraine, while European gas prices remain high as winter draws in and Russia pulls the plug on flows to Austria.

🗞️ WELL-HEADLINES

 🗽 North America

• Oil boss named as US Energy Secretary - Chris Wright, CEO of fraccing services company Liberty Energy, has strongly advocated for more hydrocarbon production and has refreshingly pragmatic views on energy and climate. He recently wrote that the push for net zero is “a sinister goal because we spend an insane amount of money pretending we're going to achieve this...and it's made energy more expensive, less reliable and impoverished people”.

• Canada after more US pipelines - keen to take advantage of a supportive White House, Canadian officials are in talks with Enbridge, South Bow, and TC Energy about potential new pipelines from Alberta into the US, which is a major importer of heavy Canadian crude.

• Rig count falls slightly - the number of operational oil rigs fell by 1 last week to 478, while gas rigs also fell by 1 to 101. Still no major movement in either after months at these levels.

🏰 Europe

• OMV gas deliveries from Russia stop - a few days after OMV won an arbitration against Gazprom, gas flows from Russia to the Austrian energy company dried up. European gas prices popped on the news.

• Russia considering new gas pipeline to China - the proposed route would go via Kazakhstan and supply up to 35 bcmpa to gas thirsty China. Russia already supplies 40 bcmpa of gas to China via Power of Siberia pipeline and LNG but is looking to ramp this up now that it has lost its major customer in Europe.

• Petrofac limps on - the heavily indebted OFS company has reached another deal with bondholders to delay debt payments while it tries to restructure.

🕌 The Middle East

• Iran, loads of energy, no power - Iran has the world’s second largest gas reserves but has been facing power blackouts in recent weeks due to under-investment into aging infrastructure and fast growing gas demand. Likely new sanctions from an incoming Trump administration won’t help matters.

⛩️ Asia & Oceania

• Barossa FPSO busting the budget - BW Offshore, which is building the vessel for gas development in Australia, has said costs are expected to exceed the budget by $150m. The Barossa FPSO is 90% complete and is in a yard in Singapore.

• Seatrium delivers a year ahead of schedule - the fifth and final newbuild rig that Seatrium has built for Borr Drilling was finished in speedy fashion.

🦁 Africa

• Azule making strides in Angola - the company’s CEO said the $2.2bn Quiluma and Maboqueiro gas project, the country’s first non-associated gas development, is ahead of schedule and set for first gas in July 2026.

🗿 Central & South America

• All quiet over here

🌍 GEOPOLITICS & MACRO

• US approves Ukraine strikes in Russia - the White House has made a major policy shift by allowing Ukraine to use US-made long range weapons to attack in Russia. Russia has previously warned such a move would represent “direct participation” in the war by NATO. What a generous parting gift from Biden…

• Russia in major attack on Ukraine energy sites - Russia launched ~120 missiles and 90 drones at Ukraine’s already battered energy infrastructure, doing serious damage to several power stations and transmission facilities. With a brutal eastern European winter closing in, and much of Ukraine’s power generation destroyed, Ukrainians are in for a torrid few months.

• Joe and Xi’s final meeting - the presidents of China and the US met for the final time of Biden’s tenure on the sidelines of the Asia-Pacific Economic Cooperation summit in Peru. They acknowledged the “ups and downs” of the US / China relationship, discussed trade, AI, nuclear weapons, and Xi promised to work with incoming president Trump.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• China EV sales speeding ahead - while EV sales stall in Europe and the US, demand in China keeps growing, with sales reaching 10 million so far this year, a 34% increase on last year. Heavy government subsidies and a market flooded with cheap models are drawing in buyers.

• Offshore wind in trouble - after a year of canceled projects, broken turbines, abandoned lease sales, and surging costs, key offshore wind regions are a long way off track to meeting government targets. According to Wood Mackenzie, offshore wind costs have risen by up to 40% in the past two years and now cost ~$230/MWh, roughly 3x more expensive than onshore wind. It’s time to pull the plug on this expensive failed experiment

🛢️ BOTTOM OF THE BARREL

Entropy.

The natural chaos and disorder that everything in the universe hurtles towards.

Left unchecked, the forces of entropy degrade everything. Our bodies, our buildings, social fabric.

But through the harnessing and application of energy, we can fight back.

Have you ever seen a perfect right angle in nature? Probably not.

But now look around you and you’ll see right angles everywhere.

They are the physical embodiment of order, the postponement of entropy’s march.

All enabled by the channeling of abundant energy.

Energy is life, energy is the economy, energy is order.

👋 BEFORE YOU GO

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

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