Hello Both Barrels crew. Here’s your daily dose of all things oil, gas, and energy, without the hot air.

Some highlights from today:

• 🤡 What’s the UN smoking?

• 💂 UK unwinding climate pledges

• 🔥Gas markets getting squeezed

• 🇦🇿 Escalation in the Caucasus

plus a lot more. Let’s get to it…

📈 The numbers

Crude prices have slipped today. No discernible reason why, other than the whims of Mr Market.

🗞️ Well-headlines

 🗽 North America

• The weekly API report has shown that US crude stocks declined by 5.3 mmbbls last week, compared with expectations of a 2.7 mmbbls draw. Gasoline stocks were up by 0.7 mmbbls. We’ll see if the EIA confirms this large draw when they report later.

• Exxon is investing in DAC technology but is steering clear of EV charging, according to a senior exec. DAC costs remain high at $600-1000/tCO2. Over here we’re skeptical of DAC and prefer investments into nature which have lower costs and other co-benefits.

• Canada's long delayed Trans Mountain oil pipeline expansion, which will triple the flow of crude from Alberta to Canada's Pacific Coast next year to 890 kb/d, is expected to shake up the North American crude market. One impact is the cost of crude will likely increase for US Midwest refiners who will now have to compete with other buyers.

🏰 Europe

• In a rare example of sensible energy speak coming out of Germany, a minister has said the country must strengthen its LNG position to ensure security of supply. Germany quickly got hold of 3 FSRUs to import LNG after cutting off piped supplies from Russia last year.

• Around 85 workers at Ithaca’s offshore UK platforms are striking from 1-7 October over pay and conditions. The assets impacted are FPF1 platform, Alba FSU, Alba North, Captain FPSO, and Captain WPP.

• Production has restarted at Troll in Norway, western Europe’s largest gas field.

🕌 The Middle East

• A quiet day here…

⛩️ Asia

• Work has started at the giant Kashagan field in Kazakhstan on infrastructure to commercialize ~ 1 bcmpa of associated gas. A new pipeline and processing plant will be built, and the gas will end up in a Russian gas network. The project will also enable ~25 kb/d of increased oil production from the field.

• Thirsty for gas. China’s Sinopec has acquired 30 cargoes of LNG - more than the 25 expected - for delivery between now and year end 2024.

• A hot summer has meant that Japan’s LNG storage levels are well below where they usually are at this time of the year meaning they may need to go on a buying spree ahead of winter. Sounds like more pressure on the gas market…

📍Everywhere else

• In a show of faith, Exxon is pledging more investment into Nigeria to increase production by ~40 kb/d. Nigeria’s output has been volatile in recent years as theft, sabotage, and poor security has caused disruption and deterred international investment into its O&G sector.

• The latest round of talks between Chevron and unions at its Wheatstone and Gorgon LNG plants in Australia have failed.

• Venezuela said that it “strongly rejects the illegal licencing round” held in Guyana last week. The two countries are in a long running dispute over the maritime border, and Venezuela claims that Guyana does not have the right to unilaterally license the areas on offer in the round. In 2018, the Venezuelan navy intercepted an Exxon drillship exploring the area.

🌍 Geopolitics & macro

• Azerbaijan has launched a major military offensive in the disputed Nagorno-Karabakh region, an area it has long fought over with Armenia. The escalation, which they are calling an “anti-terrorist” operation (the classic pretext for an invasion) has raised fears of a full scale war in a dispute that has been simmering for decades.

• Goldman’s have raised their 12 month Brent forecast from $93 to $100/bbl. I wouldn’t pay too much attention to these predictions, they’re wrong more often than not…

💨 Carbon, Climate & other energy stuff

• In a speech to the UN circus in NYC, Secretary General Guterres said that “the fossil fuel age has failed”. Honestly, what are they smoking over at the UN? Here’s what the “fossil fuel age” has done for us since 1850:

  • 🕗 Life expectancy: 29 → 71 years

  • 😊 Absolute poverty: 87% → 10%

  • 👩‍👧‍👧 Child mortality: 48% → 4.3%

  • 💸 GDP/capita: 13x increase

• As Saudi’s Energy Minister said earlier in the week, these institutions have abandoned fact-based reason and are instead corrupted by advocacy and ideology. Hydrocarbons have been an unequivocal miracle that dragged humanity out of cold, dark misery. It is, frankly, nonsense to suggest otherwise. These are not serious people.

• The maritime industry is exploring ways to power ships with nuclear energy. Military submarines and icebreakers are already powered using nuclear but the costs and perceived risks have prevented it being used in most commercial shipping.

• The UK is watering down some of its climate commitments to take a more “proportionate and pragmatic” approach. The start of policies like banning the sale of gasoline cars and gas boilers are getting pushed back. A political move to appease increasing numbers of voters rejecting the costs of net zero? Probably. A sensible one? Sure.

• Clean energy ETFs are taking a battering, with the largest seeing a record withdrawal in August.

We’re not huge Sunak fans but he’s bang on with this.

And, to be fair, the UK has done a pretty decent job at decarbonizing so far:

🛢️Bottom of the barrel

For those who don’t waste as much time on Twitter as I do, investment advisor Jim Cramer has developed a reputation for really really terrible calls.

There’s even an Inverse Jim Cramer ETF so you can invest in the exact opposite of what he suggests.

👋 Before you go

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Thanks for reading. Have a day out there. 🛢️