28th Feb 2024

Good morning, crew,

• ⚔️ NATO troops in Ukraine? 

• 😬 When you’re 6x over budget

• ⚡ Grids have a bitcoin and data problem

• 🤡 Nuclear energy, bad. Nuclear weapons, good.

• ➕ plus happy days for lawyers; Glencore front-runner for Shell Singapore; Congo’s first LNG cargo; G20’s economic optimism.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Hess rejects Exxon preemption claims - Exxon’s claimed preemption rights - that threaten to ruin Chevron’s landmark takeover - don’t apply to Guyana, according to Hess. The lawyers are gonna be busy on this one.

• Trans Mountain costs now 6x original estimate - I’ve lost count of the number of times we’ve written bad news about this pipeline. The total cost estimate has risen by a further 10% to ~$25bn. The original cost estimate for the project back in 2013 was ~$4bn! As always, consumers and tax payers will end up footing the bill.

• BP asks UG regs to reject Venture Global’s extension request - the saga rumbles on. In short: Venture wants to keep selling its LNG cargoes on the spot market where it can make big $ (although less now that LNG prices have fallen) and its long-term contractual customers aren’t happy about it.

• Crude stocks swell - the API has calculated that oil inventories spiked by 8.4 mmbbls last week (vs expectations of a 4.3 mmbbls build), while gasoline stocks fell by 3.3 mmbbls.

🏰 Europe

• Europe eases gas demand restrictions - with low gas prices, high inventory, and the sense that Europe has made it through the winter, officials have removed various gas demand restrictions that were implemented during the worst of the crisis in 2022. Specifically, it removed a policy that could have forced all countries to cut gas demand by 15% in a supply crisis.

🕌 The Middle East

• Aramco dishes out $6bn of supply contracts - it’s a great time to be a supplier to the O&G sector in Saudi Arabia. Aramco has awarded a raft of big money contracts to domestic companies providing various products such as electrical and drilling equipment.

⛩️ Asia & Oceania

• Glencore fancies Shell’s Singapore assets - CNOOC had been set to buy Shell’s refinery and petrochemical units but has dropped out of the process, leaving Glencore as the front runner.

• Pertamina intensifying exploration efforts - the Indonesian IOC is determined to raise its O&G output to improve energy security and will be doing this through both the drill bit and international M&A, said a senior official.

🦁 Africa

• Congo celebrates first LNG cargo - the west African country has joined the LNG exporter club with the start up of Eni’s Congo LNG project which has come onstream after only being sanctioned in 2022. The project will eventually consist of two FLNGs with a combined capacity of 3 mtpa.

🗿 Central & South America

• $1.3bn rescue package for Petroperu - having previously said it wouldn’t offer any more financial support to its struggling IOC, the Peruvian government has now agreed to provide the company with a new loan to keep it solvent.

🌍 GEOPOLITICS & MACRO

• The West frets over sending troops to Ukraine - French President has said that sending troops to Ukraine “could not be ruled out” and that ensuring Russia’s defeat was necessary to ensure “Europe’s collective security”. “We will do everything needed so Russia cannot win the war,” he told reporters. However, NATO allies like the US, UK, and Germany were quick to rule out the idea, and Moscow said such a move would lead to the “inevitability” of war between Russia and NATO.

• G-20 cautiously optimistic on the global economy - after meeting in Brazil this week, the group concluded that the likelihood of a “soft landing” has increased, in part thanks to faster than expected disinflation (cough - lower energy prices - cough). On the downside, conflicts and protectionism present growing risks to the global economy.

• Germany considering developing nuclear weapons having rejected nuclear power - nuclear power wasn’t safe enough for Germany. But nuclear weapons? No probs.

• The Chinese are flying again - aviation fuel demand is expected to grow by 13% in 2024 as it recovers from Covid restrictions. There is so much latent oil demand in air travel: over 80% of the global population have never been on a plane.

• Maersk sees no let up in Red Sea disruption - the shipping giant has warned customers that delays and higher costs are likely to last into Q2 this year as the Houthis continue their mischief in the Red Sea.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Bitcoin power demand threatens grid stability - the White House is concerned about the strain that bitcoin mining is placing on the US power grid. As the US simultaneously pushes for electrification and an increase of intermittent renewable capacity, the arrival of large new power demand in the form of bitcoin mining and data centers is far from ideal. Expect to hear a lot more about this issue in the coming years.

• European offshore wind bounces back - after almost zero investments in 2022, investments in European offshore wind rose to ~$30bn in 2023, and new capacity installations reached a record high of 16.2 GW. Wind Europe said the biggest threat to continued growth is a lack of investment in the grid to cope with the new capacity.

• Shake up at Orsted - the wind developer has announced a new CFO and COO as it tries to recover from a a series of losses and project cancellations. Good luck gents, you’ve got a tough job trying to fix a fundamentally flawed business.

🛢️ BOTTOM OF THE BARREL

Couldn’t agree more. Biomass like Drax is insane and scandalous.

👋 BEFORE YOU GO 

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