18th October 2024

Gooood morning. Here’s what went down in all things oil, gas, and energy

• ❓ What transition?

• 🔥 Flaring on the rise

• 💀 Israel eliminates Hamas boss

• 🎉 Amazon joins the nuclear party

• ➕ plus Chinese shale oil; BP mulling offshore wind sale; P66 closing LA refinery; crude inventories fall; more UK exits; more South American entries; Oman’s NOC in bumper IPO; and barrels more.

Have a great weekend - catch you Monday.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• P66 slapped with $600m fine and closes LA refinery - the refiner has been ordered to pay the sum to biofuel maker Propel Fuels for stealing trade secrets. Sounds like some good old fashioned corporate espionage. Separately, P66 said it was closing its LA refinery that’s over 100 years old, citing “market dynamics”. Self destructive California has done a great job in driving energy businesses out of state…

• Kinder Morgan going big on nat gas infra - “In my decades of experience…I've never seen a macro environment so rich with opportunities for buildout of natural gas infrastructure”, said a KM exec director. KM has taken FID on the $455m expansion of the Gulf Coast Express pipeline in Texas and has more projects in the pipeline (excuse the pun) to help unlock the oceans of natural gas in the Permian.

• Crude inventories resume slide - after a rare rise in the previous week, US crude stocks came down again last week by 2.2 mmbbls, compared with analyst expectations of a 1.8 mmbbls increase. Despite all the bearish sentiment hanging over oil markets at the moment, US crude inventories are right at the bottom of their 5-year range.

• Santos breaking the bank in Alaska - capex at its Pikka oil development has increased by $500m (~20%). The project, which Santos says will generate an IRR of 20% at $75/bbl oil prices, is due onstream in 2026.

🏰 Europe

• Japex joins the throngs leaving the UKCS - the company is looking for buyers for its 15% stake in the Seagull field that begun production last year and which is set for peak output of 50 kboe/d. Many operators are heading for UK’s exit as the government prepares to make the already-onerous tax regime even more punitive.

• More UK sanctions on Russian “shadow” tankers - the sanctions bar a further 18 oil tankers linked to Russia (taking the total to 43) from using UK ports or British maritime services around the world. The UK’s menacing foreign secretary declared it was his “personal mission to constrain the Kremlin, closing the net around Putin and his mafia state”. No doubt the Russians are terrified.

🕌 The Middle East

• Oman’s OQEP raises $2bn in IPO - the wholly-state-owned upstream company listed 25% of its shares in the largest public offering in the Middle East this year, which was 2.4x oversubscribed.

• Iran grappling with Kharg oil spill - the spill is about 6km off the country’s main export terminal and came from a leaking subsea pipeline. The extent of the spill isn’t clear but it’s not thought to be too bad and it’s unclear if tanker loadings would be affected.

⛩️ Asia & Oceania

• Chinese shale oil - China’s pilot shale oil project in the east of the country has reached production of a whopping ~12 kb/d. Got to start somewhere, I guess. The government is keen to boost domestic production, including from hard-to-extract shale deposits.

• India keeps gobbling up Russian crude - taking advantage of a lack of alternative buyers thanks to sanctions, India snapping up large volumes of cheap Russian oil, reaching about 1.9 mmb/d in September (~40% of total imports) from almost 0 before the Ukraine war.

• New gas for PNG LNG - Exxon and its JV partners are about to bring onstream much needed feed gas for the Papua New Guinea LNG from the Angore gas project which is set to produce up to 350 mmcf/d.

• Singapore’s new LNG terminal - the city state will next week unveil plans for a second LNG import terminal. Singapore is heavily reliant on gas and imports most of its needs via pipelines from Malaysia and Indonesia.

• Santos fires up CCS project - the 1.7 mmtpa Moomba project in Australia is injecting CO2 into depleted reservoirs at a cost of less than $30 per tonne. Santos and partner Beach are studying the potential of importing up to 20 mmtpa of CO2 by 2040 to inject into the site.

🦁 Africa

• DRC cancels licencing round - the round was launched back in 2022 to kickstart the development of the country’s oil & gas resources but has now been axed, citing late submissions, inappropriate or irregular offers, and a lack of competition.

🗿 Central & South America

• IOCs bag Guyana PSCs - Total, Petronas, and others have reached terms with Guyana to explore five oil and gas offshore blocks. Guyana is trying to diversify its O&G industry that is currently dominated by a consortium led by Exxon Mobil.

• CNOOC lands 4 Brazilian leases - including one operated and three non-operated interests in exploration blocks in the offshore Pelotas and Santos basins.

🌍 GEOPOLITICS & MACRO

• Israel “eliminates” Hamas leader - a little over a year after the October 7th attacks, Israel has taken out Yahya Sinwar, the head of Hamas and architect of the attacks. Sinwar had reportedly been hiding in tunnels in Gaza over the past year and was eventually killed by Israeli soldiers in a chance encounter. Despite the killing, Israel said the war in Gaza would continue…

• Flaring on the rise - Rystad estimates that global gas flaring climbed by 7% last year, with Russia, Iran, and Iraq the biggest culprits. Every year about 140 bcm of gas is flared by upstream operators with no export options for gas produced alongside oil, almost equivalent to the entire annual gas demand of South America.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Amazon joins the nuclear party - a few days after Google announced a major nuclear partnership, Amazon has said it is investing over $500m to develop small modular reactors in the US to help provide reliable zero-carbon power to its data centers and servers. Nuclear equities popped on the news.

• BP considering offshore wind farm down - rumours are that BP wants to sell a minority stake in its offshore wind division to reduce its capital expenditure into the sector, as it reigns in its “renewables” ambitions under its new CEO. Prudent.

🛢️ BOTTOM OF THE BARREL

🤣🤣🤣

We need to stop talking about the “energy transition”.

There’s no such thing.

Certainly not today, and likely not for many many moons.

Hydrocarbon demand is at all time highs and growing every year.

The idea we’re already transitioning away from them is a delusion.

This remind you of anything…?

👋 BEFORE YOU GO

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

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