29th November 2023

Good morning team. This is Both Barrels. Your daily dose of all things oil, gas, and energy, without the hot air. Here’s what hit the wires today:

• ⚫ Black Sea storm wreaking havoc on oil output

• ❌ OPEC yet to find compromise

• ✈️ Transatlantic on cooking oil

• 💧 How well do you know your crudes?

• ➕ plus Harbour hunting for deals; Rolls-Royce souring on hydrogen aviation; oilfield pics from a bygone era.

Let’s go.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Hunt continues for source of GoM spill - it’s been a week since the ~26 kbbls leak was discovered offshore Louisiana but authorities have yet to identify where it came from after surveying over 60kms of pipelines. No new oil releases have been detected, though. A mystery.

• US crude stocks fall - after some big builds in recent weeks, the API estimates that US crude inventories fell last week by 817 kbbls, less than the 2 mmbbls decline expected by analysts. Gasoline inventories were down by 900 kbbls.

🏰 Europe

• Harbour Energy eyeing up deals - the UK’s largest E&P player is evaluating a “number of material” M&A opportunities according to its CEO. Harbour is rumoured to be looking at Wintershall DEA.

• Exxon’s UK refinery expansion nearly complete - in some rare good news for European industry, the $1bn project at the Fawley refinery will help the UK reduce its reliance on diesel imports when it’s finished next year. Exxon also announced plans to develop a new hydrogen plant at the UK’s largest refinery.

• Russian LNG being reshipped to global markets via Europe - “transshipment” of Russian LNG cargoes has been banned in the UK and the Netherlands to try and hit Russian revenues, but 21% of Russian LNG flows to Europe end up making their way to other markets by being transferred onto other tankers in Belgium, France, and Spain.

⛩️ Asia & Oceania

• Storms halt nearly 1 mmb/d Kazakhstan output - some of the country’s largest fields including Tengiz, Kashagan and Karachaganak have dramatically cut production, with some ceasing output entirely, due to severe storms in the Black Sea that have closed export routes. The closures, which are expected to last into early December, have reduce Kazakhstan’s crude production by ~950 kb/d (~55% of total output).

🦁 Africa

• Japan committed to Mozambique LNG - the two countries have reaffirmed their desire to resume development of the 13.1 mtpa facility that has been suspended since April 2021 following attacks by militants. LNG imports are an essential component of Japan’s energy mix so they will be eager to get the mega project back on track asap.

🗿 Central & South America

• IOCs flocking to Venezuela - keen to be part of the opening up party, delegates from Shell, Repsol, MOL, and others have headed to Venezuela to secure deals or recover debts. Hanging over the excitement, however, is the prospect that the White House could reimpose sanctions at anytime if Caracas doesn’t hold up its side of the bargain by allowing free elections.

🌍 GEOPOLITICS & MACRO

• OPEC+ talks faltering - the cartel has reportedly made little progress in resolving its disagreement around production quotas for next year. With the next official meeting due tomorrow, a further delay is possible but not expected. “Everyone is just holding their positions”, a Reuters source said.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Rolls-Royce souring on electric and hydro-powered aviation - the CEO commented that he believes conventional propulsion systems will continue to dominate for at least the next 20 years and that sustainable aviation fuel (SAF) is the only way for the airline industry to feasibly meet climate goals. He said that Rolls-Royce is, however, still committed to its alliance with Airbus and others to develop hydrogen-powered planes.

• Speaking of SAF - Virgin Atlantic has completed the first 100% SAF-powered transatlantic flight with a commercial airliner. The fuel was mostly made from used cooking oil and waste animal fat. Don’t expect this to go mainstream just yet though: the fuel is still ~2x more expensive than conventional kerosene and there isn’t that much waste cooking oil to go around.

• Total invests in Morocco to UK power project - Xlinks plans to build a subsea power cable between Morocco and the UK to deliver wind and solar power generated in the North African country. Hmmm, call me skeptical but this project doesn’t pass the smell test.

• Best performing IPO stock of 2023? - in a sign of the times, an Indonesian coal miner is the world’s best performing newly listed stock this year, climbing by ~2,900% since its IPO in March.

• Rockefeller Foundation targeting net-zero by 2050 - the foundation of the grand daddy of modern oil has said its $6bn fund will be net-zero by 2050 (i.e. all the fund’s holdings will be net-zero). These long term promises are all warm and fuzzy on the surface but largely meaningless in my opinion. Not least because so much changes over such a long period of time, including the people who set the targets and are responsible for pursuing them.

🛢️ BOTTOM OF THE BARREL

Think you know your crudes?

The latest Platts periodic table of oil is a work of art. Check out the interactive version here.

You can even get it as an A1-sized poster…my wife won’t mind one on the bedroom wall, will she?

Some of these photos are incredible. 1930’s Huntington Beach: instead of ice cream vans they had oil derricks.

👋 BEFORE YOU GO 

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