20th November 2023

Goooood morning. This is Both Barrels with all that matters in oil, gas, and energy today:

• ✂️ OPEC considering more cuts

• 🙏 Why the US should give thanks to Europe’s greens

• 🔥 Red Sea hotting up

• 🇧🇷 Brazil: the next energy superpower

• ➕ plus Argentina’s bombastic new president; rig count climbing; China’s crude stocks build.

Let’s go.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Oil rig count climbs - after edging down for months, the oil rig count has risen by 6, its largest weekly jump since early October, to 500. The count is 123 lower than it was a year ago. Has it finally bottomed out in this cycle?

🏰 Europe

• KUFPEC confirms PGNiG NCS sale - the deal is worth $454m and is for all of the Kuwaiti NOC’s assets in Norway. The package produces ~15 kboe/d and includes stakes in the offshore Gina Krog and Sleipner Vest fields, among others.

• Russia lifts gasoline export ban - after scrapping its diesel export ban last month, Russia has done the same with gasoline, saying the policy had the desired effect of bringing down domestic prices.

• Poland abandons plans for a second LNG FSRU - Gaz-System couldn’t find enough interested takers for the capacity.

🕌 The Middle East

• More gas finds in the Empty Quarter - Aramco has discovered two major gas fields in the region which it hopes will drive it’s plans to increase gas production by 50% by 2030. Some estimate the Rub Al Khali basin, aka the Empty Quarter as it’s nearly all desert, could be one of the most prolific hydrocarbon basins in the world.

⛩️ Asia & Oceania

• China is topping up oil stocks again - analysts suggest that refiners were adding to their crude stockpiles by as much as 560 kb/d during October after drawing down in September. The average so far this year has been a net 680 kb/d build. That’s a pretty sizable chunk of global “demand”…

• Pakistan seeking LNG to avoid winter shortage - got a cargo you need to sell? Hit up PLL.

   

🗿 Central & South America

• Brazil’s bright future - the FT wrote a solid piece about Brazil’s emergence as an energy superpower. The country currently produces 3.4 mmb/d of oil which is expected to grow to 5.4 mmb/d by 2030, making it the world’s fourth largest producer. Brazil’s recent success has been driven by the prolific pre-salt region, and there are hopes the emerging Equatorial Margin province will fuel the next stage of growth.

• Welcome, comrade - Russia’s Gazprom and Venezuela’s PDVSA are discussing plans to jointly develop gas fields in the South American country. Russia has been a staunch supporter of its old communist ally during tough years under US sanctions.

🌍 GEOPOLITICS & MACRO

• OPEC considering more cuts - “sources” have said the cartel is considering deepening its output cuts by an additional 1 mmb/d (on top of the current ~3.5 mmb/d reduction) following the ~20% fall in oil prices over the past couple of months. The group meets on November 26th. Saudi insists oil market fundamentals are strong, so a further cut might signify they’ve changed their mind.

• Houthis seize Israeli cargo ship in the Red Sea - the Iranian-backed Yemeni rebels said “all ships belonging to the Israeli enemy or that deal with it will become legitimate targets”. The Red Sea, which leads to the Suez Canal, is a crucial and vulnerable bottleneck for global shipping. Any signs of escalation in those waters will put traders (and the US Navy) on high alert.

• Nearing a ceasefire deal in Gaza - the US and Qatar have been mediating a deal between Israel and Hamas that would create a temporary 5-day ceasefire and allow for the release of some Israeli hostages. Details remain murky and the deal has yet to be agreed.

• Argentina’s fiery new president - Javier Milei won a landslide victory, running on a promise to reverse the damage caused to the country by “shit leftists”, “wokeism”, and “socialists”. This could get interesting.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• More countries turn to nuclear - the US will supply the Philippines with nuclear power technology so that it can develop its nuclear energy industry. Sri Lanka announced it was looking for investors to fund its own reactors. Sweden plans two new reactors by 2035. The surge in interest in nuclear power comes as countries realize its benefits as the only source of reliable, baseload, zero-carbon power.

• Texas winter blackout risk - the grid operator failed to secure the additional power supply needed to fully mitigate the risk of blackouts this winter in Texas in the event of severe storms. The Lone Star State’s grid has become increasingly unstable in recent years due to under investment and increased penetration of unreliable wind and solar.

• UAE inaugurates world’s largest solar project - the 2GW Al Dhafra facility in the desert outside of Abu Dhabi is made up of nearly 4 million solar panels.

🛢️ BOTTOM OF THE BARREL

As the Northern Hemisphere heads into winter, energy security is top of mind. Blackouts and freezing in your own home are not that fun.

Europe is better prepared for the cold than it was last year. Its gas storage is full to the brim and industrial demand has declined. But, with the Russia gas tap closed, it’s still crossing its fingers that the gods grace it with mild temperatures to avoid the worst.

Which begs the question…

Why doesn’t Europe work to develop more of its own gas? It’s sitting on seas of the stuff, including huge shale deposits.

Yet for ludicrous ideological reasons, Europe prefers to buy the gas from abroad - at higher prices and carbon emissions of course - rather than extract it from home soil.

Out of sight, out of mind, I guess.

The environmental movement has scored many an own goal, but its opposition to domestically produced natural gas has to be one of its biggest blunders.

The big winner is the US, whose fast growing LNG sector will gladly supply Europe with gas for decades.

So, to our American friends: don’t forget to give thanks to this week to Europe’s green lobby.

👋 BEFORE YOU GO 

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