29th July 2024

Good morning. Happy Monday. Let’s get to it. Here’s what’s up in oil, gas, and energy today:

• 🤝 Vital and NOG snap up Point

• 🤨 Maduro “wins” dodgy election

• ❌ Israel and Hezbollah on the brink

• 🇮🇳 India’s refinery expansion

• ➕ plus Total exits giant South Africa gas finds; Harris reverses anti-fracking stance; US rig count in rare rise; investment pullback in UKCS; Sinochem selling Peregrino, and bags more.

Let’s go…

📈 THE NUMBERS

Oil prices have continued their slide, falling for three consecutive weeks.

WTI is now below $80/bbl on concerns about Chinese economic growth and a general risk-off sentiment that saw a sharp decline in equity markets last week.

🗞️ WELL-HEADLINES

 🗽 North America

• Vital and Northern O&G in $1.1bn Point buy - the two companies are jointly acquiring Point Energy which produces ~ 34 kboe/d across ~20,000 net acres in the Delaware region of the Permian Basin. Vital is buying 80%, Northern’s taking the remaining 20%.

• Oxy in $818m sale to Permian Resources - the assets include 29,500 net acres in the Permian. Oxy is undergoing a $6bn divestment push to help reduce its debt following the $12bn takeover of CrownRock.

• Harris reverses anti-fracking stance - the Democratic nominee said in 2020 that “there’s no question I’m in favor of banning fracking”, however her campaign has said that this is no longer her position. Guess they finally released how moronic a position it was.

• New US Pres. will have limited influence on O&G production - whoever wins the election won’t have much of an impact on short term US O&G output, according to Goldman Sachs, because of the time taken for changes in regulation to feed through. The bank thinks that Permian production will grow by 340 kb/d this year, after an “exceptionally strong 520 kb/d in 2023”.

• Rain relief in Jasper - hope are that rain will help contain a huge fire in Alberta, Canada, that has been threatening oil sands operations. However, it’s likely that the fire will burn for several more months, according to a Parks Canada official.

• A rare jump in oil rigs - the Baker Hughes rig count has shown a rise in oil rigs last week of 5 to 482, its first increase since early May.

🏰 Europe

• Equinor warns new taxes threaten Rosebank electrification - the Labour party has vowed to increase a windfall tax on the UK O&G sector and, surprise surprise, E&Ps are cutting back investment and taking their money elsewhere. “All large energy projects are big and long-term investments and predictability and stable fiscal regimes are important”, Equinor’s CEO said. There’s more political risk in the UK than in Sudan for oil companies.

🕌 The Middle East

• Oman building new LNG train - the 3.8 mtpa facility is being built at the Qalhat Industrial Complex and will be operational by 2029 as the country looks to ramp up its gas export capabilities.

⛩️ Asia & Oceania

• India boosting refining capacity by 20% - the country is investing to increase its refining capacity to 6.19 mmb/d by 2028 to meet rising local fuel demand. There’s so much oil demand to come from India’s 1.4 bn people where oil demand per capita is less than a third of China’s…

• First awards from Malaysia’s MBR+ - Hibiscus, Ping, and Jadestone were all awarded PSCs in the inaugural MRB+ which is a new process to offer already-discovered resources and late life assets to interested players.

🦁 Africa

• Egypt lures in $340m of investment - the country signed a deal with Shell and Petronas to boost natural gas production in the Mediterranean's West Delta region, and an agreement with Cheiron Energy to increase oil production in the Gulf of Suez.

• “Too challenging” - Total has exited two blocks in South Africa because it believes the huge gas discoveries it made there, Brulpadda and Luiperd, are not economically viable, despite their estimated 4.5 tcf of resources.

🗿 Central & South America

• Sinochem looking to sell Peregrino - the Chinese company acquired a 40% stake in the giant offshore Brazilian field in 2011 for $3.1bn and is now rumored to be selling the interest to independent producer Prio.

• Pemex’s losses deepen - Mexico’s heavily indebted NOC reported a $14bn loss in Q2, its largest since the global pandemic. The company is suffering from large debt, operational troubles, declining production, and a weak Mexican peso that pushes up costs.

🌍 GEOPOLITICS & MACRO

• Diplomats scramble to prevent Israel / Hezbollah escalation - the powerful Iranian-back militant group in Lebanon is on high alert after Israel promised the group would pay a “heavy price” for a fatal airstrike on a football pitch in Israeli occupied Golan Heights. Cross-border fire between Israel and Lebanon has grown steadily since 8th October, but the fears are that this latest strike will result in an all-out war.

• Maduro claims election win, opposition disagrees - Venezuela’s strongman has been declared the winner of Venezuela’s presidential election by the head of the National Electoral Council (CNE), who is a close ally of Mr Maduro. Exit polls had pointed to a win for the main opposition who have said they will challenge the result and called on the military “put yourselves on the right side of history”. Shock horror that this election sounds dodgy as hell. Don’t expect sanctions to be removed anytime soon.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• US wind output falls to a 3-year low - thank God for natural gas generators which have been ramped up to fill the void and ensure air conditioning keeps running in these hot summer months. When will we realize that trying to power a modern economy on the vagaries of the weather is madness?

• Petronas, Eni, and Euglena greenlight Malaysian biofuels project - the group have taken FID on the project that is due to start up in 2028 and will produce sustainable aviation fuel and other biofuels such as renewable diesel/hydrogenated vegetable oil.

🛢️ BOTTOM OF THE BARREL

It doesn’t matter how many wind turbines you build. If there ain’t any wind, there ain’t any power.

Humans gave up on using wind as a source of energy a long time ago, and for good reason.

👋 BEFORE YOU GO 

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

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