28th October 2024

Good morning team - this is Both Barrels. Your daily dose of all things oil, gas, and energy. Here’s what hit the wires today:

• 💥 Israel retaliates, oil drops 5%

• 🫀 “Energy is the lifeblood of the economy”

• 🧊 Arctic LNG 2 on ice

• 🇱🇾 IOCs returning to Libya

• ➕ plus Europe’s hypocrisy; Blackstone eyeing up $3.5bn EQT buy; oil rigs fall; US’ vast lithium resources; PetroChina closing mega refinery; Spain’s self-sabotage.

Let’s go…

📈 THE NUMBERS

Crude prices tanked by ~5%, losing their war risk premium, after Israel’s restrained attack on Iran.

Remember that OPEC are due to start unwinding production cuts at the end of November. In this market? No chance.

🗞️ WELL-HEADLINES

 🗽 North America

• Blackstone eyeing up $3.5bn EQT stakes - the PE giant is rumoured to be nearing a deal with EQT to acquire various minority stakes in interstate natural gas pipelines. The farm down would help EQT reduce the debt pile it built up when it acquired Equitrans earlier this year.

• “What really matters is consistent and coherent energy policy” - with the US election just around the corner, Chevron CEO Mike Wirth has asked for stability from whoever ends up in the Oval Office. “The price of energy is embedded in everything…Energy is the lifeblood of the economy…Affordable and reliable energy is essential to keeping inflation at a level that economies can handle - and that's why we need investments, and we need stable policy to encourage that investment.” Hear, hear.

• Canadian gov’t to finance oil sands CCS - the Canada Growth Fund has said it will help fund the $11.5bn Pathways Alliance CCS project in Canada, which is backed by large E&Ps representing about 95% of Canada’ oil sands production.

• Oil rig count slips - the US oil rig fleet fell by 2 this week to 480, while gas rigs climbed by 2 to 101. Oil rigs have been hovering around 480 since late June, as WTI prices have remained fairly range-bound between $70-$80/bbl.

• Whitecap re-fi - the Canadian E&P has issued $400m of bonds at a rate of 4.38% to repay existing debt.

🏰 Europe

• Arctic LNG 2 put on ice - Russia’s new ~$20bn flagship LNG terminal is rumoured to be pausing operations, with no restart date in sight, as international sanctions take their toll. Funding partners, offtakers, tankers, and suppliers have been abandoning the giant 19.8 mtpa project to avoid the wrath of American sanctions. Ouch.

• Europe’s Russian energy “hypocrisy” - a top exec at MOL has defended Hungary’s reliance on Russian gas, pointing to the “hypocrisy” among its Western allies which are buying “repackaged” fuels from Turkey or India. Russia exports crude to Turkey and India where it’s refined into products which are then happily bought by Western customers that have supposedly embargoed Russian energy…

🕌 The Middle East

• Kuwait’s decarbonsation plans - the country has developed plans to increase its reliance on imported LNG and reduce its flaring, to hit its goal of net-zero emissions by 2050. Meanwhile, it still intends to increase crude capacity to 3.5 mmb/d by 2030 and 4 mmb/d by 2035 from 3.15 mmb/d today.

⛩️ Asia & Oceania

• PetroChina closing mega refinery - the entire 410 kb/d plant will shut down around mid-2025, and about half of its capacity has already been mothballed, amid refining over capacity in China and a series of accidents at the facility.

• Eni nearing Northern Hub greenlight - the ultra-deepwater development offshore Indonesia is targeting 5 tcf of gas and 400 mmbbls of condensate, with FID expected later this year now that a “critical mass” of resources have been discovered in the region.

🦁 Africa

• Returning to Libya - after a decade-long hiatus since the outbreak of civil war in 2014, Eni and BP have resumed onshore drilling in Libya. Repsol and OMV are also set to restart ops in the country in the coming weeks.

🗿 Central & South America

• Nothing much happening over here

🌍 GEOPOLITICS & MACRO

• Israel strikes back - after keeping us all on tenterhooks for weeks, Israel has retaliated against Iran for Iran’s missile barrage back in early October. The large but clearly restrained attack (it seems pressure for the US and others worked) avoided energy infrastructure and instead struck military sites including missile production facilities and air defence. It feels like that’s it for this latest tit for tat, and Iran’s leader gave a measured response, saying the strike “should neither be downplayed nor exaggerated”.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• A vast lithium discovery in the US - the US Geological Survey has discovered a huge lithium reserve spanning Arkansas, Louisiana, Texas, Alabama, Mississippi, and Florida, containing enough of the metal to meet over 9x the IEA’s projection of global lithium demand for electric vehicles in 2030.

• Spain’s energy tax backfiring - Cepsa has become the second major Spanish O&G company after Repsol to threaten to cancel multi-billion $ investments into green hydrogen if the country moves ahead with a planned windfall tax on energy companies. Western politicians can’t decide if they hate O&G companies or if they want their money to help pursue their green dreams.

🛢️ BOTTOM OF THE BARREL

Mike Wirth’s comments, “The price of energy is embedded in everything… Energy is the lifeblood of the economy”, should be in every school syllabus across the world.

Like a human heart, our energy system operates out of sight, critical to everything we do.

Yet to most it’s invisible and abstract.

Which explains why so many in the West take it for granted and casually believe it can be upended without consequence.

If we all understood just how important affordable and reliable energy is to every facet of our lives, then we’d be having a very different discussion about hydrocarbons in Western corridors of power.

👋 BEFORE YOU GO

Any feedback, requests, terrible jokes? Please just ping a reply to this email and let rip. We read every word. 

Oh and if you could share us with your pals who might like a drop of us, then we’d be very happy.

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

Was this forwarded to you? Both Barrels is a concise and irreverent oil, gas, and energy briefing, delivered to you daily. It’s free to subscribe.