2nd April 2025

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:

• 😢 Shed a tear for the Saudis

• 💣 “There will be bombing”

• 🐻 Russia chokes Kazakh crude exports

• 🪨 BlackRock, oh so fickle

• ➕ plus the flood is coming; blast at Malaysian gas pipeline; Brookfield closes in on $9bn Colonial deal; Saipem and Valaris celebrate big contracts; first oil at Johan Castberg; NNPC readies for IPO; OPEC output ramps up; and barrels more.

Let’s go…

📈 THE NUMBERS

Crude prices popped yesterday - before settling this morning - as geopolitical tensions mount between the US, Russia, and Iran. WTI is back into the $70s.

🗞️ WELL-HEADLINES

 🗽 North America

• Japan invests in US upstream gas - Tokyo Gas has acquired a 70% interest in Chevron’s East Texas gas assets for $525m, which is part cash and part commitment to fund development capex. Chevron, which is undergoing plans to divest $10-15bn of assets by 2028, will continue to operate the assets.

• Brookfield closing in on $9bn Colonial buy - the US private equity firm is apparently putting the final touches on a deal to buy the largest U.S. fuel transportation system which stretches over 5,550 miles from Houston to New York.

• US LNG exports smashes records - with the ramp up of Plaquemines LNG, the US exported 9.3 mt of LNG in March, far higher than the previous record of 8.6 mt in December 2023. Meanwhile, Trump has lifted a Biden-era restriction on LNG export deadlines for new plants.

🏰 Europe

• First oil at Johan Castberg - the giant field in Norway’s chilly Barents Sea will reach peak output of 220 kb/d and produce between 450-650 mmbbls of oil over the next 30 plus years. The development involves an FPSO with 30 wells and cost ~$8.2bn, which operator Equinor expects to be repaid in less than two years.

• Varo buys Swedish refiner Preem - Preem owns two refineries in Sweden with a combined capacity of 352 kb/d, which is 80% of the country’s capacity. Preem is also the second largest producer of biofuels in Europe. The value of the deal was kept under wraps.

🕌 The Middle East

• Saudi mega projects under pressure - the poor Saudi’s are apparently struggling to find the cash to build mega projects like Neom City and a ski resort as low oil prices put pressure on government budgets. The kingdom needs ~$91/bbl Brent prices to balance its books. So sad. Maybe we should start a charity fundraiser for them?

• Saipem secures big money contracts - the OFS company has won new contracts in the Middle East and Guyana worth $730m for clients including Exxon.

⛩️ Asia & Oceania

• Russia chokes Kazakh crude exports - Kazakhstan’s crude exports could fall by 700 kb/d after Russia ordered the shutdown of various facilities at a major Black Sea oil export terminal. Russia cited safety reasons for the closure but rumours are that it may be punishment for Kazakhstan’s continuous over production of crude vs its OPEC+ quota.

• Huge blaze at Petronas pipeline - a 500 meter section of one of Malaysia’s main gas pipelines went up in flames, damaging nearly 200 homes. The fire has been contained and thankfully it seems like there were no casualties.

• Sinopec makes big shale discovery in eastern China - the company said it has found ~1 bnbbls of proven geological shale oil reserves at its Shengli Oilfield's Jiyang shale. Whether they can get the stuff out of the ground at a reasonable cost is whole different matter.

🦁 Africa

• Nigeria’s NOC readies for IPO - the country’s national oil company, NNPC, is looking for advisors as it prepares for a long-awaited IPO. It’s not clear how much of the company will be listed, and at what price, nor when exactly the listing will happen, but the move is likely to raise billions for the company. Meanwhile, Nigeria’s government has replaced the CEO and Chairman of the company.

• Valaris bags $352m contract - its DS-10 drillship has been idle since last summer but is now heading to an undisclosed location in West Africa for a new two year contract worth $482k per day.

🗿 Central & South America

• Argentina starts gas exports to Brazil - after over a year of negotiations, gas has flowed for the first time from Argentina’s Vaca Muerta shale formation to Brazil’s large gas market, via Bolivian pipes.

🌍 GEOPOLITICS & MACRO

• “There will be bombing” - US President Trump has threatened Iran with military action if Iran does not agree to a new nuclear deal. His comments come after Iran last week rejected direct negotiations with the US. Trump took a hard-line view on Iran in his first term, hammering its oil exports with heavy sanctions. The trouble is, doing so again will push up global oil prices which runs counter to his goal of lowering energy prices. Catch-22.

• OPEC+ output edges up - the group’s production is set to rise further in May by ~135 kb/d as it continues with its planned unwinding of 2.2 mmb/d of output cuts. April’s output is expected to rise by a similar amount. Time to find out how strong oil demand really is…

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• BlackRock’s change of tune - in his annual letter to investors, Larry Fink, CEO of the world’s largest asset manager, emphasized the need for reliable US power grids and energy pragmatism. Notably, there were no mentions of ESG, sustainability, and climate change, which is a stark and amusing turn of events after he spent years strongly advocating those themes. Their values change with the wind (and public sentiment), it seems.

🛢️ BOTTOM OF THE BARREL

I remember pouring over this book as a wide-eyed, geeky analyst over 10 years ago when I’d just started in the industry. Good times. Even better reading.

👋 BEFORE YOU GO

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

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