Good morning team - this is Both Barrels. Your daily dose of all things oil, gas, and energy, without the hot air.

Here’s what hit the wires today:

• 🇻🇪 Possible sanctions relief for Venezuela’s oil sector

• 😰 Australian LNG strikes averted

• 🧱 Building BRICS

• ✈️ Russian revenge

Let’s get to it…

📈 The numbers

European and natural gas prices fell back further today on the news that strikes at Australian LNG plants have been called off.

Oil prices remained flat as concerns over stalling economic growth in China were offset by a continued fall in crude stocks.

🗞️ Well-headlines

 🇺🇸 North America

• US crude inventories fell by 6.1 mmbbls last week, compared with an expectation of a 2.8 mmbbls draw. Gasoline stocks went the other way, climbing by 1.5 mmbbls, contrary to analyst expectations of a 0.9 mmbbls draw.

• The Trans Mountain Expansion project has asked Canadian regulators for a route deviation on a 1.3 km section of pipeline in British Columbia, months before the 600 kb/d barrel per day project is due to start shipping crude. The request is apparently due to “technical challenges” tunneling through hard rock.

🇪🇺 Europe

• Wintershall has restarted production at it’s Dvalin gas field, offshore Norway, after it was shut-in in late 2020 due to high levels of mercury in the gas.

• Russia’s Gazprom Neft announced that its Q2 net profit fell 43% from the same period last year to 140.1 billion roubles ($1.5 billion). Lower oil prices in 2023 are hitting producers revenues across the board.

🇸🇦 The Middle East

• Iran’s oil minister has said that the country’s crude production will likely rise to 3.4 mmb/d by the end of September. Iran’s production has grown by almost 50% over the last two years despite Western sanctions, with most of its volumes going to China.

• Saudi Arabia is expected to continue it’s additional 1 mmb/d oil production cut for a third consecutive month in October. With new supplies coming from Iran and Iraq, and tentative economic growth in China, Saudi is taking a cautious approach to support oil prices.

📍Everywhere else

• Woodside has reached an agreement with unions to avert a strike at its North West Shelf LNG plant in Australia, the world’s largest. Strikes are also being threatened at two Chevron plants. The three plants combined account for ~10% of global LNG supplies which is why the strikes have been so influential on gas prices this week.

• Exxon and partners are planning a $12.9 billion investment to develop their 6th offshore oil field in Guyana. The FPSO for the so-called Whiptail project would start operations in 2027 and reach production of ~250 kb/d, taking the consortium's oil output in Guyana over 1.2 mmb/d. Guyana’s taking off!

• Namibia’s offshore oil reserves could total ~11 bnbbls according to state-run NAMCOR. The country doesn’t produce any oil yet but a string of successful discoveries by Shell and Total hope to turn the country into a major producer.

  
  

🌍 Geopolitics & macro

• The BRICS nations have invited 6 other countries, Argentina, Egypt, Iran, Ethiopia, Saudi Arabia and the UAE to join the block. I wonder what they’ll call it? BRICSESUAIIE doesn’t quite have the same ring to it…

• The US is pulling together a proposal to lift some sanctions on Venezuela’s oil sector if the country holds democratic elections. Venezuela holds the largest oil reserves of any country in the world but its production has declined to just ~0.8 mmb/d today, from 2.9 mmb/d in 2019, due to sanctions and terrible mismanagement. Is the USA getting worried about global oil supplies…? Or maybe it’s getting tired of Middle Eastern dominance in the oil markets?

• In a surprise to absolutely no one, head of the Wagner mercenary group, and ring leader of a failed coup in July against the Kremlin, Yevgeny Prigozhin, has died in a plane “crash” in Russia. If you’re gonna take a pop at the emperor, you better not miss…

• At the first US Republican Presidential debate, candidate Vivek Ramaswamy said that the “climate change agenda was a hoax”. Make of that what you will.

💨 Carbon, Climate & other energy stuff

• Bloomberg NEF estimates that India will need to invest $13 trillion to reach net zero by 2050, three times the country’s current GDP. No problem then…

• In London, over 90% of newly installed low-emissions cameras have been stolen or damaged, as the public fights back against the mayor’s plans to introduce new charges for motorists. More evidence of how out of touch politicians’ environmental plans are with the wishes of the masses.

🛢️Bottom of the barrel

The folly of weather dependent power generation. Despite huge investment into solar power, California still needs to main the same level of reliable back-up generation (mainly gas) for the mornings and evenings when power demand is highest and solar output is zero.

Wind and solar are capacity additions, not replacements, which is why they add so significantly to system costs.

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