23rd October 2023

Good morning team. Welcome back to Both Barrels, with all you need to know today in oil, gas, and energy. Here’s what hit the wires over the weekend:

• 💸 Chevron acquires Hess for $53bn

• 3️⃣ Qatar’s hat trick

• ⛔ India refuses to buy oil in yuan

• ➕ plus bickering in Guyana, US rig count edges up, suspects in Baltic sabotage, Greta gets roasted, and plenty more.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Chevron acquires Hess - not to be outdone by rival Exxon, Chevron is buying Hess for $53bn in an all-stock deal at a price that is a 10.3% premium to Hess’ 20-day average share price. Hess’s key assets include a stake in hotspot Guyana’s Stabroek block and assets in the Bakken shale patch. The long term conventional assets Chevron is getting hold of here act as a balance to the short-cycle shale assets they snapped up when they acquired PDC Energy earlier this year for $6.3bn. The US oil consolidation is well and truly underway.

• More trouble for Trans Mountain - after recently resolving a route-change issue, the long delayed and controversial Canadian oil pipeline is now facing problems drilling through hard rock as it attempts to complete the final parts of the project.

• Permian gas flaring hits 3 year high - flaring in the Permian rose 22% from the previous year in September according to analytics firm Enverus.

• Rig count edges up - the US oil rig fleet increased by 1 last week to 502. The count is still well below its previous high of 627 in November last year as producers keep their focus on cost disciple.

🏰 Europe

• Exxon selling German refinery stake - midstream company Alcmene is acquiring Exxon’s 25% interest in the Karlsruhe refinery. The value of the deal hasn’t been revealed.

• Sabotage Cluedo - Finland’s investigation into the damage of the Balticonnector gas pipeline is focused on two boats, one Chinese and one Russian boat, that were in the area at the time of the explosion.

• Breidablikk first oil - Equinor has brought its $2bn 200 mmbbls Breidablikk oilfield in the Norwegian North Sea onstream 2 months ahead of schedule.

• Stormy North Seas - “severe weather” caused the Stena Spey oil rig in the UK North Sea to lose four of its eight anchors. Workers were airlifted off the platform but the well remains secure.

• Russia’s new gas markets - Gazprom’s CEO has commented that Russia will provide an additional 600 mcm of gas to China this year to meet strong demand and, much to the annoyance of EU leaders, will supply Hungary with extra gas over the winter.

🕌 The Middle East

• Qatar’s hat trick - after Total and Shell, Eni has become the latest European major to sign a 27-year LNG supply deal with Qatar. At 1.5 mtpa, the volumes, which will be delivered to Italy, are smaller than the other 3.5 mtpa deals.

⛩️ Asia & Oceania

• India won’t pay in yuan - India has firmly rejected Russia’s request to pay for oil in Chinese yuan. Russia wants more yuan (and less rupees) as it becomes more reliant on Chinese imports, but India believes using yuan will help China, its geopolitical rival.

• South Korea’s & Saudi storage deal - South Korea will store 5.3 mmbbls of Saudi crude at a facility on South Korea’s south coast. The deal provides Saudi with a greater foothold in a core Asian demand market, while giving SK a source of crude to draw on in case of emergency.

• CNOOC’s coal seam gas bounty - the Chinese NOC discovered a gasfield with 100 bcm of reserves at its Shenfu prospect in the Shaanxi province. The success is CNOOC’s second major coalbed methane find in recent years after the Linxing field was discovered in early 2021.

• Singapore’s centralization - the city state, which relies on gas for 95% of its power generation, is aggregating demand from its utility companies in order to improve its bargaining power for gas purchases and “create a more stable and secure power system”.

🗿 Central & South America

• Not all plain sailing in Guyana - Exxon and Guyana are bickering about the contractual terms of new licences. "We are not going to weaken them to suit ExxonMobil," Guyana’s Vice President said, "If it does not want to sign them, that is fine. But Guyana must get a fair share from its resources."

• Wasting no time in Venezuela - after sanctions were eased last week, Trafigura is looking to charter at least one large tanker to export Venezuelan fuel oil. Meanwhile, SLB’s CEO said his company is moving “as fast as we can…to respond and participate to this reopening”.

🌍 GEOPOLITICS & MACRO

• Mike Worth’s conviction - In an interview with the FT, Chevron’s CEO Mike Worth, said the company is “grounded in integrity and a deep belief in doing the right thing…We are not selling a product that is evil. We’re selling a product that’s good.” He also said bearish IEA demand scenarios don’t “live in the real world”. On a different note, the man gets up at 3:45am every morning. Machine.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Total pushing ahead with offshore wind - despite the well documented troubles in offshore wind, Total has partnered with Corio Generation, an offshore wind developer, to develop a 3GW offshore wind farm off the coast of New York and New Jersey. New York recently denied a request from offshore wind developers to significantly increase the subsidies for several projects. I wouldn’t bet on this project getting off the ground any time soon…

🛢️ BOTTOM OF THE BARREL

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