26th October 2023

Shell cuts low carbon jobs | A bailout for big wind | Israel readying ground invasion

October 26, 2023

Crew, 📣📣📣

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Harry 🛢️🛢️

Ammo for when someone next asks “oh but isn’t the oil and gas industry dying?”

Anyway, back to business. Here’s what hit the wires in oil, gas, and energy today:

  • ❌ Shell cuts low-carbon jobs

  • 💸 A bailout for big wind

  • ⚔️ Israel readying ground invasion

  • ➕ plus more LNG for Eni, LNG cargoes favoring Europe, crude inventories creep up

📈 THE NUMBERS

As of 05:24 ET on 26/10/2023. N.B. prices for JKM LNG and uranium can be delayed by a day or two.

🗞️ WELL-HEADLINES

 🗽 North America

  • US LNG cargoes favoring Europe - extra US LNG volumes are heading to Europe rather than Asia as high shipping rates to Asia and a shortage of slots in the Panama canal reduce the price arbitrage for US sellers. Typically, higher selling prices and greater profits in Asia mean that extra US LNG cargoes end up there rather than Europe.

  • Crude stocks creep up - the EIA reported that US crude inventories climbed last week by 1.4 mmbbls, compared with analyst expectations of a 0.24 mmbbls decline. Gasoline stocks were up by 0.16 mmbbls.

  • Excelerate Energy LNG deal with Bangladesh - the supply deal involves 1 mtpa of LNG for 15 years.

🏰 Europe

  • Shell cutting low carbon jobs - the company announced it is axing 15% of its low-carbon workforce (~200 roles) as part of its new focus on increasing profits. New CEO Wael Sawan, who has made some sharp u-turns on the major’s approach to net-zero, is certainly making his mark.

  • Europe’s winter demand kicking in - LNG imports to Europe are set to jump by 30% in November, compared with October. Let the the second winter gas scramble begin.

  • More LNG contracts for Eni - the Italian major has signed a 3-year 0.8 bcmpa supply deal with Merakes LNG Sellers in Indonesia.

  • Some Q3 earnings highlights from today - Repsol is raising its dividend; Total’s net income down 35% but is maintaining share buybacks; Baker Hughes beats estimates.

⛩️ Asia & Oceania

  • Turkmenistan’s gas deal with Iraq - the landlocked central Asian country is to supply 9 bcmpa of gas to Iraq. Gas-rich Turkmenistan, which produces ~75 bcmpa, is on a push to diversify its customer base away from China and develop its promising gas resources.

🦁 Africa

  • Are you sure, Kenya? - Kenya’s President has commented that his country is focusing more on renewables than oil and gas as a path for economic development. This is at odds with many other African nations which have recently expressed their commitment to develop their hydrocarbon resources.

🗿 Central & South America

  • Venezuela wasting no time - after US sanctions were eased last week, Venezuela has already started signing oil export contracts, which include demanding prepayment in euros from customers.

  • India wants its money - Speaking of Venezuela, India’s ONGC is hoping to recover $500m in pending dividends from its Venezuelan operations that have been stuck since 2014.

🌍 GEOPOLITICS & MACRO

  • “We are preparing for a ground invasion” - Israel’s PM confirmed what everyone already expected. He didn’t elaborate on when or how the Israeli army would enter Gaza, but commented that airstrikes “have already killed thousands of terrorists and this is only the beginning”.

  • (Part of) Libya wants to block oil sales - Libya’s eastern government (it has two) has called for an embargo of its oil sales to countries supporting Israel in its conflict with Hamas. It would need support from the rival western government in Tripoli to do so, and there’s no indication that would happen.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

  • A bailout for big wind - struggling Siemens Energy, one of the world's largest manufacturers of wind turbines, is in talks with the German government for financial aid amid spiraling costs and turbine performance issues.

  • China’s renewables can’t keep up - despite China’s huge investment into wind and solar capacity, thermal generation is still growing because renewables growth can’t keep pace with total power demand growth.

  • Australia’s net-zero push to keep driving prices higher - the country’s energy regulator has warned that power prices in Australia, already the second highest in Asia Pacific (behind Japan), will keep rising to finance its low carbon plans. Australia aims to increase its share of low carbon power to 82% by 2030 from about a third now. This is gonna get expensive…say a prayer for our Aussie friends.

  • Brazil’s huge food CO2 footprint - a study has found that 74% of Brazil’s entire annual CO2 emissions come from agriculture. Brazil is the world's biggest beef and soybean exporter, and the majority of these emissions arise from deforestation (burning and felling trees) to clear land for cattle.

Australian consumers realizing net-zero ain’t so cute and fluffy after all

🛢️ BOTTOM OF THE BARREL

Oil can be a demanding business:

Managing power grids need not be:

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