22nd November 2023

Anyway, here’s Both Barrels with today’s highlights on all things oil, gas, and energy:

• 😔 ESG fund managers are missing Big Oil

• ⏫ US crude stocks jump again

• 🔋 Another battery “breakthrough” claim

• 🗑️ The advantages of nuclear waste

• ➕ plus Gaza ceasefire; stealing gas with plastic bags; Shell hits gas in Egypt; Venture LNG dispute escalates.

Let’s dive in.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Venture LNG dispute rumbles on - in a move that will no doubt further anger Shell, Repsol and its other foundation customers, Venture Global has said “commercial operations" from the Calcasieu Pass LNG are not expected to begin until Q4 2024. Until that point the long-term supply contracts don’t come into effect and Venture can keep selling cargoes more profitably on the spot market (as it has done with over 200 cargoes since early last year, allegedly).

• Crude stocks jump again - the API estimates that US oil inventories climbed by 9 mmbbls last week, far higher than a 1.5 mmbbls build anticipated by analysts. Gasoline stocks, however, fell by 1.8 mmbbls.

• Louisiana spill shuts in production - seven unnamed producers have been forced to cease oil production due to the 26 kbbls pipeline leak in the Gulf of Mexico. The Coast Guard is still searching for the source of the release.

• US gas turbines getting more efficient - better technology has helped increase the utilization rate of US gas turbines from 40% in 2008 to 57% today, according to EIA analysis.

🏰 Europe

• Equinor’s extending hydrocarbon future - the company expects to produce as many hydrocarbons in 2030 as it did in 2020, and may extend that ambition to 2035. It has plans to drill ~30 exploration wells in Norway next year, roughly the same number as this year. Everywhere you look, companies and countries are gradually extending and increasing their hydrocarbon outlooks…Energy reality.

• Germany’s Nigeria LNG supply deal - Nigeria will supply up to 1.2 mtpa to Germany, starting in 2026. In a parallel deal, Germany will invest $500m in low carbon energy across rural communities in the west African country.

• Europe’s first winter test - a cold snap is set to hit Europe this weekend with temperatures in London to fall to zero. The energy-strapped continent has benefited from a mild autumn so far but things look like they might be about to change. Hold onto your woolly hats.

• Technip sells Measurement Solutions division - One Equity Partners bought the business for $205m.

🕌 The Middle East

• Oman / BP LNG supply deal - the deal is for 1 mtpa and will last for 9 years, starting in 2026.

• Israel reopens Ashkelon port - the port is Israel’s primary crude import terminal but was shut in October due to the conflict with Hamas.

⛩️ Asia & Oceania

• Pakistan cracking down on gas theft - rising gas prices are leading to increases in gas thefts with some people resorting to stealing and transporting gas with giant plastic bags. Although, most theft is done through illegal pipeline hookups.

• China's lower winter fuel exports - last winter, when Russian energy was blocked by sanctions, a surge in fuel exports from China stepped in to fill the gap. Due to lower refining margins and stronger domestic demand in China, we’re unlikely to see a repeat this year.

• Gorgon back to full capacity - an “electrical incident” had reduced output to 80% at one of the LNG facility’s three trains.

🦁 Africa

• Shell strikes it lucky in the East Med - the company made a significant gas discovery at the North East El-Amriya block, offshore Egypt. Further analysis is needed to confirm resource estimates.

🗿 Central & South America

• Heatwave in Brazil diverts LNG volumes - the hot weather disrupted Taylor Swift’s tour and is now making its mark on LNG markets. A US LNG cargo en route to Europe turned around in the Atlantic to instead head for Brazil where demand is surging. The flexibility of the LNG market in action.

• Commercial gasoline for Dos Bocas in 2024 - Mexico’s flagship new 340 kb/d, $11bn refinery will finally begin commercial gasoline production in January, according to Pemex.

🌍 GEOPOLITICS & MACRO

• Ceasefire agreed in Gaza - fighting is due to pause for 4 days to allow for the release of 50 hostages in Gaza. 150 Palestinian women and teenagers will be released from Israeli jails as part of the deal. Hopes are that the temporary ceasefire can be extended into a longer term truce.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Sodium-ion battery breakthrough? - Swedish company Northvolt claims to have made a breakthrough with its technology that offers an alternative to the dominant lithium-ion batteries. Northvolt says its battery doesn’t use any lithium, cobalt, or nickel, and so would significantly reduce dependence on China’s supply chain. How many times over the years have we read “battery breakthrough” headlines? Too many to count. Let’s wait and see.

• ESG fund managers missing Big Oil - Deutsche Bank’s CIO believes that oil majors should be included in ESG funds as they are some of the largest investors into low carbon technology. Or is it because ESG funds have performed terribly over the past year and their managers (who I would guess are generally fairly anti oil & gas) are desperate to find ways to improve their battered returns?

• The EU recognizes nuclear as a net-zero solution - the EU Parliament voted heavily in favour of finally including nuclear on the list of technologies that would be eligible for government support.

🛢️ BOTTOM OF THE BARREL

Waste is an advantage, not a disadvantage, of nuclear power.

There’s hardly any of it, it can be recycled, and it’s easy to safely contain. No one, anywhere, ever has been harmed by nuclear waste.

Compare that to waste from hydrocarbons: diffuse, planet-warming CO2. Or waste from wind and solar: millions of tons of unrecyclable and often toxic materials.

There are no perfect solutions, only trade offs.

👋 BEFORE YOU GO 

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