22nd January 2024

Morning morning. This is what went down over the weekend in all things oil, gas, and energy:

• 🔥 Major Russian oil terminal up in flames

• 🧚 Siemens boss on net zero “fairytale”

• ⚖️ Exxon sues its own investors

• ⭐ A golden age for offshore oil

• ➕ plus North Dakota’s slow recovery; Aramco expands in China; Libya output resumes; Petroperu in trouble.

Let’s take a look…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• North Dakota output recovery to take weeks - the state regulator said it may take a month before oil output from the region is restored following the winter storm outage. Volumes are currently down by ~350 kb/d as the cold weather has frozen operations and shut off power at various facilities.

• Exxon suing investors to block climate petition - Exxon has said that activist investors Follow This and Arjuna Capital are driven by an “extreme agenda” and is taking them to court to prevent their climate proposal from going to a vote at its next annual investor meeting. The investors want Exxon to set Scope 3 emissions targets.

• Chevron’s Duvernay assets up for grabs - the US major has confirmed it’s looking to sell its Duvernay position in Canada as part of a $10-15 billion portfolio clean up following its spate of acquisitions (Hess, PDC and Noble). The assets produce ~ 40 kboe/d and are expected to fetch ~$900m.

• US rig count continues its gradual decline - the US oil rig count fell by 2 last week to a total of 497. The fleet has now fallen for for 5 out of the last 7 weeks and is 116 lower than a year ago. The gradual decline in rigs is unsurprising given the retreat in oil prices in Q4 23 and supports expectations that growth in US shale output will slow significantly this year after booming in 2023.

• Hilcorp’s $35m settlement - the US producer has agreed to pay the amount to settle accusations that it knowingly underpaid government royalties.

🏰 Europe

• SLB sees a bright future for offshore oil - while reporting strong Q4 results, the OFS painted a bright outlook for the offshore sector, driven by record investments in the Middle East and plenty of activity in Brazil, Angola, Guyana and Norway. If US shale growth does indeed slow, new volumes will have to come from somewhere else. We may soon be entering a golden period for offshore oil.

• Tyra to restart in March - Total’s gas field in Denmark has been offline since 2019 for redevelopment. It is expected to produce 2.8 bcmpa of gas.

🕌 The Middle East

• Saudi greenlights $6.4bn petchem plant in China - SABIC will be building the 1.8 mtpa ethylene (used to make plastic and chemicals) facility in partnership with state-owned Fujian Fuhua Gulei Petrochemical. This announcement follows a series of recent investments by Saudi into China’s downstream sector as Aramco looks to strengthen its ties with its largest customer.

• TAQA sells Kurdistan oilfield stake - General Exploration Partners is buying the 47% stake in the Atrush field for an undisclosed sum. The field produces ~50 kb/d of oil.

⛩️ Asia & Oceania

• Australia secures gas for tightening domestic market - despite being a large gas producer, east Australia is facing a possible gas supply crunch as it phases out coal power. To ease concerns, the gov’t has signed deals with Exxon and Woodside to ensure enough supply for at least the next two and a half years.

🦁 Africa

• Back to full throttle at Libya’s Al-Sharara - the country’s largest oilfield, which produces ~300 kb/d, had been shut in for about a week following local protests.

🗿 Central & South America

• No more cash for Petroperu - the government has ruled out any more financial support for the struggling state oil company, a few days after the company said it needed $2.5bn. “The money that has been requested will not be invested, for the simple reason that there are no funds", the PM said.

🌍 GEOPOLITICS & MACRO

• Giant Baltic fuel terminal up in flames - the Ust-Luga facility on the Baltic Sea in Russia, which is a crucial export hub for Russian oil products, is on fire after an attack by Ukrainian drones. Operations have been suspended, leaving tankers lying idle outside the port. It’s unclear how long the disruption would last. Vital energy infrastructure is always a tasty target in war.

• Netanyahu defies US over Palestine’s future - the Israeli PM has doubled down on a recent statement that ruled out Palestinian statehood and a “two-state solution”. The “two-state solution” is the official goal of the US government and so Nentanyahu’s position puts Israel at odds with its closest ally.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Siemens Energy boss calls out net-zero cost “fairytale” - the head of one of the world’s largest wind turbine manufacturers has blown the myth of “cheap renewable energy” out of the water and said we need to get real about the higher costs involved in net-zero. “I think [the net zero targets] are realistic, but they come at a cost,” Mr Kaeser said. “You need to stick by the facts at some point, even though facts sometimes may not be liked”. Finally the truth is outing.

• Pentagon getting rooftop solar - one of the largest office buildings in the world will soon be covered in solar panels which, ironically, will almost certainly be made in China. The US administration hopes the move will help "reestablish the federal government as a sustainability leader"…

• China’s voluntary carbon markets begins trading - the market will include carbon credits from forestation, mangroves, solar thermal power, and offshore wind power projects, with prices expected to trade between $6-8/tCO2. This voluntary market is separate to China’s mandatory national emissions trading scheme that started in 2021 and covers gas and coal power stations.

🛢️ BOTTOM OF THE BARREL

Check this out to see the scale of the fire at the Russian oil terminal:

👋 BEFORE YOU GO 

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