27th November 2023

Welcome back, American friends. Congrats on surviving family bickering and food comas.

Here’s what hit the wires over the weekend in all things oil, gas, and energy:

• 🍃 COP28: a v brief brief

• 🚢 More tanker attacks

• 🥶 Europe braces for cold

• ➕ plus Israel / Hamas ceasefire holds; Uniper’s $600m fine; Jordan spreading its bets; Canada ramping up drilling.

Let’s dive in.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Canada ramping up drilling activity - O&G producers are due to drill 8% more wells in 2024 than they did this year. The (eventual) opening of the Trans Mountain pipeline expansion and the Coastal GasLink next year are encouraging more activity by increasing export capacity.

🏰 Europe

• Europe braces for a cold December - forecasts suggest Europe is going to get very chilly in the coming weeks. Great for skiers, not good for Europe’s fragile energy system. Last year, the continent got lucky and avoided excessive pain thanks to a mild winter. It looks like the weather may not be so kind this year. How many extra coal plants do we expect the German greens to fire up?

• Uniper hit with $600m fine - a German court ruled that Uniper must pay the sum to an unnamed European supplier of LNG to settle a dispute over pricing of a long-term supply contract.

• Turkey’s natural gas hub - Russia and Turkey are expected to soon announce plans for a natural gas hub in Turkey. The hub would act as an exchange for onward sales of Russian gas to other markets, but has been delayed by a disagreement over control of the project.

🕌 The Middle East

• Jordan looking for alternative energy supply - spooked by disruptions to gas imports from Israel, Jordan is considering importing LNG or using more diesel to ensure energy security. Jordan is almost entirely dependent on imports to meet its energy needs.

• Crescent wins rights to two Iraqi fields - and an unnamed company won the rights to a third field in Iraq’s fifth oil & gas licencing round.

⛩️ Asia & Oceania

• China’s Gazprom imports hit new high - high gas demand in China meant Gazprom delivered more than contracted volumes through the Power of Siberia 1 pipeline last week. Having lost its top customer in Europe, Russia is becoming increasingly dependent on China for gas sales.

• BP enters Japan’s retail market - the major, which is working to evolve into a fully integrated energy company, has received approval to operate in Japan’s retail power market. Details are scarce.

• India Oil Corp doubling capacity at Ennore LNG - the increase to 10 mtpa is to help meet growing gas demand in the country. India is targeting a 15% share of gas in its energy mix by 2030, up from 6% today.

• Sinopec’s $4.5bn Sri Lanka investment - the Chinese NOC is set to announce it will build a refinery in Sri Lanka as it increases its international footprint. Meanwhile, Sri Lanka is suffering from a severe economic crisis and is eager for foreign investment.

🦁 Africa

• Disagreement behind BP’s Senegal exit - earlier this month, BP walked away from the giant 25 tcf Yakaar-Teranga gas field. It turns out that a disagreement over where to sell the gas was a key reason for the exit. Senegal wanted the gas for domestic use while BP intended for it to be sold on the more lucrative international market.

• Mozambique's energy master plan - the country is due to unveil its ambitious new energy strategy to partners and potential donors at COP28. The plan includes $80bn of investments across hydro, EVs, grid upgrades and other areas.

🌍 GEOPOLITICS & MACRO

• More tankers under attack - an Israeli-owned cargo ship in the Indian Ocean was damaged by a drone attack over the weekend and a tanker carrying ammonia was temporarily seized by armed attackers in the Gulf of Aden but is now safe after a US warship came to the rescue.

• Israel / Hamas ceasefire holds as more hostages released - both sides are open to extending the pause in fighting beyond the agreed four days to allow for more prisoner swaps and aid to enter the enclave. Israel has said that its operations would resume with full force, however, after the truce period.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• COP 28: a brief - tens of thousands of diplomats, activists, and bleeding hearts are gathering in the UAE later this week for the UN’s latest climate jamboree.

  • What to look out for: we’ll get the usual “last chances” from politicians that arrived on private jets, indigenous tribe photo ops, and 13 year-olds opining on energy policy. Beyond that, here’s what we’ll be keeping an eye on:

    • Hydrocarbon phase out: some parties are pushing for a commitment to stop using hydrocarbons by a specific date.

    • Climate finance: will richer countries increase their commitments to pay poorer countries for decarbonisation and climate adaptation?

    • Nuclear: for the first time, nuclear may get a starring role in any final agreement.

    • Food: agriculture is responsible for ~25% of global CO2 emissions but has been largely ignored in previous COPs. It’s on the agenda this time apparently.

  • What to expect: this COP could be dumpster fire for two reasons. Firstly, the energy crisis of last winter has thrown energy security into the limelight and this will crash head on with calls to reduce hydrocarbon use. Secondly, government coffers are battered from COVID and dealing with cost of living crises. With everyone feeling the pinch, appetite for expensive climate commitments is likely to be low.

• India to triple coal output - we wrote on Friday about king coal’s long reign and right on cue India has revealed plans to triple output from its coal mines by 2028. No amount of squawking from Western politicians will change the fact that coal will play a key role in the development of many emerging economies for decades to come.

• Mexico’s $10bn green hydrogen project - President AMLO has said an unnamed Danish fund is set to invest in a facility in southern Mexico that will produce hydrogen for powering ships.

• Airlines agree new emissions targets - after 5 days of meetings, 100 countries have agreed to reduce emissions from global aviation by 5% by 2030. Aviation is responsible for 2-3% of global emissions.

• Lithium’s 80% price crash - prices for the battery metal have fallen sharply in the past 12 months amid ample supply and slowing demand for EVs. The glut is expected to last until 2028.

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO 

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