20th February 2024

EU industry sounds the alarm | Macron’s IEA Freudian slip | Russian refineries taking a beating | Total delays Mozambique LNG order

February 20, 2024

A slooooow news day today. Hang on in there. Here’s what we’ve got for you:

  • 🚨 EU industry sounds the alarm

  • 🥖 Macron’s IEA Freudian slip

  • 💥 Russian refineries taking a beating

  • 🛑 Total delays Mozambique LNG order

  • ➕ plus mixed outlook for the Bakken; Shell demolishes iconic HQ; China snapping up Brazil FPSOs; Indonesia wants more gas.

📈 THE NUMBERS

As of 10:00 ET on 20/02/2024. N.B. prices for JKM LNG and uranium can be delayed by a day or two.

Oil prices near three week highs after the Houthis took things up another notch by wrecking a cargo ship in the Red Sea.

🗞️ WELL-HEADLINES

 🗽 North America

  • Mixed outlook for the Bakken - North Dakota’s Department of Mineral Resources expects oil output from the region to remain more or less flat this year at 1.3 mmb/d. “The Bakken is far from over. In fact, it continues to lead the way with a lot of these technology developments that we share with our friends in Texas and New Mexico”, the director said. However, he also warned about the negative impact that a second Democrat presidential term would have on the region.

🏰 Europe

  • Russian refineries taking a beating - regular attacks by Ukrainian drones on Russian energy infrastructure knocked off ~ 380 kb/d of Russian refinery output in December. Russia’s total refinery output is usually ~ 5.2 mmb/d so it’s not a massive blow but is certainly significant. How sad.

  • Rosneft cashing in despite sanctions - profits at Russia’s NOC jumped by 47% in 2023 largely thanks to increased gas production and cost savings. Rosneft said its oil lifting costs (operating costs) were just $2.60/boe.

  • Shell demolishing iconic Aberdeen HQ - work has started to tear down the building which, if you ask me, will be no great loss to the local skyline.

It’s costing Shell $10m to flatten this eyesore

⛩️ Asia & Oceania

  • Indonesia offering more acreage - after Mubadala made a major gas discovery last year, the country is keen to double down on gas development by offering more exploration blocks in the North Sumatra basin in an auction this year.

  • India secures LNG supply contract with Equinor - fertilizer and petchem company Deepak Fertilizers has signed a 15-year, 0.65 mtpa agreement for supplies starting in 2026. A reminder that natural gas is a key component in making the fertilizers that feed the world.

🦁 Africa

  • Total delays LNG carrier order following attacks - the company has again delayed FID on 17 new LNG tankers for its Mozambique LNG project following a renewed spate of militant attacks in the region. The $20bn project has been under force majeure for 3 years but is apparently nearing a revival.

🗿 Central & South America

  • China snapping up Brazil FPSO stake - a consortium of Chinese buyers is acquiring a 30% interest in the Marechal Duque de Caxias FPSO, offshore Brazil. The terms of the deal haven’t been released.

  • Guyana wants natural gas, too - the country’s president wants to repeat the success Guyana is having with oil production in natural gas. “There’s an immediate window of opportunity between now and the end of the decade to monetize and maximize [our gas resources]”, he said. Fair enough. Gotta make hay while the sun is shining.

🌍 GEOPOLITICS & MACRO

  • EU industry sounds the alarm - the heads of over 70 business and industry leaders have urged the EU for support on high energy costs and less environmental red tape that are ruining the continent’s international competitiveness and deterring investment. Europe is rapidly de-industrializing thanks to self-destructive energy and environmental policy. Investment is instead going to Asia, the US, and the Middle East.

  • Aramco on the state of the oil industry - the CEO has said the world needs to discover a Saudi Arabia every 2 years to replace depleting capacity. Natural depletion is 6% a year, while supply growth rate is 3% a year. He also mentioned that Saudi’s production costs were just $3.1/bbl, that global oil demand is solid, and that the market is well supplied. Watch the interview here.

“This enormous challenge comes just as both large companies and SMEs face the most severe economic downturn in a decade, demand is falling, production costs increase and investments move to other regions…Sites are being closed, production halted, people let go. Europe needs a business case, urgently.”

EU Business Leaders Antwerp Declaration - 20.02.24

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

  • Macron tells us what we all know about the IEA - “The IEA has become, so to speak, our armed wing for implementing the Paris Agreement,”, the French president said. Funny, the IEA’s original mandate was to impartially ensure stable energy markets, but it has become abundantly clear in recent years, as many are now pointing out, that its priorities have shifted.

  • India turning to nuclear - India has become the latest country to reveal plans to invest significantly in nuclear power and is seeking $26bn in private investment to finance its ambitions. The government hopes to build 11 GW of new nuclear capacity by 2040, on top of the 7.5 GW it currently has.

🛢️ BOTTOM OF THE BARREL

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