20th November 2024

Good morning crew. Here’s all you need to know in the most important sector on planet earth:

• 🥶 Winter is coming

• 🇳🇴 Johan Sverdrup hiccup

• 💣 Ukraine pokes the bear with a US stick

• 📈 WTI futures in contango

• ➕ plus UK’s decom struggles; Iran rapprochement?; Plaquemines LNG over budget; DT Midstream splashes out; Singapore oil tycoon’s heavy sentence; Eni’s supercomputer; Brazil and Argentina nearing gas supply deal; a deal in Kurdistan; and barrels more.

Let’s dive in…

📈 THE NUMBERS

WTI futures flipped very slightly into contango at the near end of the curve for the first time since February, implying short term market tightness was easing.

A contango structure usually occurs when there’s more supply than demand in spot markets, and it incentivises traders to put barrels into storage as they can fetch a higher price in the future than in the spot market.

🗞️ WELL-HEADLINES

 🗽 North America

• Venture’s Plaquemines LNG running over budget - the under-construction 20 mtpa LNG export project in Louisiana is running ~$2.4bn over budget and total costs are now set to reach $22bn. Rising labor, steel, and processing equipment costs are busting budgets for many LNG developers in the US.

• DT Midstream in $1.2bn pipelines buy - it acquired three regulated natural gas transmission pipelines with a total capacity of ~3.7 Bcf/d across the Upper Midwest from ONEOK.

• Equinor’s Bay du Nord “super-project” - the 1 bnbbls offshore Canada project was shelved in 2023 due to rising costs but Equinor is confident it can come up with a viable development solution to get it off the ground.

• Regulator orders shut down of West Ells oilsands - Sunshine Oilsands’ facility in Athabasca, Canada, has failed to address repeated equipment issues and is behind on tax payments.

🏰 Europe

• LNG cargoes divert to Europe - high gas prices in Europe have caused at least 5 LNG tankers to change course from Asia and instead head to Europe. As the global LNG market becomes larger and more liquid, tankers are increasingly switching destinations compared with the traditional fixed “floating pipeline” model.

• Winter is coming - after getting lucky over the past couple of winters with mild weather, early forecasts for Europe this year are a little chillier. Europe has yet to face a bracing winter without Russian gas. And gas stockpiles are already falling fast…

• Johan Sverdrup temporarily offline - Norway’s largest oilfield (producing ~ 750 kb/d) was shut down temporarily due to a problem at an onshore power station that provides power to the facility. Production has since been restored.

• UK decom struggles begin - the mature O&G province has a tidal wave of large offshore decom projects just around the corner, but an industry report has said that decom works are already costing more than expected. By 2030, spending on UK decom is likely to exceed capital investment for new projects.

• France importing record levels of Russian LNG - try as hard as it might, Europe just can’t kick its addiction to Russian gas. Perhaps it should focus on encouraging rather than hindering domestic gas production. Just an idea.

• Turkey reviving plans for state energy cos IPOs - the government wants to sell minority stakes in Turkish Petroleum Corporation (TPAO) and Petroleum Pipeline Corporation (Botas).

🕌 The Middle East

• A breakthrough in Kurdistan / Iraq talks - crude exports from Kurdistan have been halted for over a year due to an impasse between the Kurdistan regional government and the central Iraqi government. It seems they have finally reached an agreement and flows (~450 kb/d) will restart in 2025.

⛩️ Asia & Oceania

• Singapore oil tycoon gets 17.5 years - Lim Oon Kui, the 82-year-old founder of now collapsed Hin Leong Trading, and one of the city state’s most prominent figures in commodity trading was done for fraud.

🦁 Africa

• Somalia anyone? - US-based E&P Liberty Petroleum is looking for partners to drill in Somalia’s ultra-deep frontier waters that could host in-place resources of at least 8 bnbbls of oil.

🗿 Central & South America

• Brazil and Argentina nearing gas supply deal - the preliminary agreement could see Argentina export up to 30 mcm/d of gas from the Vaca Muerta to Brazil via a new gas pipeline through Paraguay or Uruguay.

• Petrobras ramps up spending plan to $111bn - the Brazilian NOC has increased its 2025-29 capex budget by $10bn vs an earlier plan as it seeks to increase its output from 2.7 mmboe/d to 3.2 mmboe/d.

🌍 GEOPOLITICS & MACRO

• Ukraine hits Russia with US long range missiles - yikes. Ukraine wasted no time in making the most of US approval to use US-made ATACMS missiles to strike Russian territory. Moscow says it shot down five of six missiles which were aimed at a military facility ~70 miles inside Russia. Talk about poking the bear…

• Two subsea telecomms cables cut in Europe - Germany has claimed sabotage after the cables connecting Finland with Germany, and Lithuania with Sweden, were mysteriously severed. The suspected culprit, a Chinese ship, has been boarded by the Danish Navy.

• Iran teases pause to uranium enrichment - the UN’s nuclear agency has said Iran has proposed stopping enriching uranium towards nuclear weapon grade in return for the UN forgiving them for their lack of cooperation with inspectors in recent years. The first signs of a new agreement with Iran?

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• COP draws to a close - you’d probably forgotten the summit was even happening but delegates are still squabbling in Azerbaijan before things wrap up on Friday. Key talking points this time around are about climate finance, and how much rich countries should give to poorer countries to help them adopt cleaner energy and adapt to a changing climate.

• Eni’s supercomputer - Eni has launched one of the world’s most powerful supercomputers, using all sorts of buzzwords like “leverage”, “efficiency”, “net zero”, “business chain” to describe what it will do for the company.

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO

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

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