30th November 2023

Rise ‘n shine. Here’s Both Barrels with your morning update on all that matters in oil, gas, and energy:

• 🚨 Trouble on the Venezuela / Guyana border

• 💬 OPEC+ talks down to the wire

• 👑 Oxy in talks to buy CrownRock

• 💰 Activist investor takes $1bn P66 stake

• ➕ plus Equinor exits Nigeria; Russia doubling down on The Northern Route; M&P acquisition preempted.

Let’s dive in.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Oxy in talks to acquire CrownRock - the WSJ has reported that the deal for the Permian producer would be worth over $12bn. Conoco has also been rumoured to be interested in CrownRock. Will we have a bidding war?

• Activist investor takes $1bn Phillips 66 stake - Elliot Investment Management wrote a public letter to P66 saying management had taken “its eye off the ball” in its refining operations and that, with improvements, its share price could reach $200 from $118 today. Elliot wants to appoint two new board members to help drive the turnaround.

• EIA confirms moderate crude build - US oil inventories rose by 1.6 mmbbls last week and gasoline stocks by 1.8 mmbbls. Both increases surpassed analyst expectations.

🏰 Europe

• Saipem wins big in South America - the Italian contractor has landed two major offshore contracts in Brazil and Guyana worth a combined $1.9bn. In Brazil, the work is for the giant Raia pre-salt gas development, and in Guyana it’s for Exxon’s Whiptail project in the Stabroek block.

• OMV inks LNG supply deal with Cheniere - the Austrian O&G company will buy 0.85 mtpa from the US supplier’s Sabine Pass facility for 15 years starting in 2029.

• Russia doubling down on Northern Route - as it shifts the focus of its energy sales towards Asia, Russia is rapidly increasing its use of the icy Arctic Northern Sea route. Last year, Russia transported just 1 cargo of 0.48 mmbbls through the route, this summer it was 13 cargoes with 10.4 mmbbls.

⛩️ Asia & Oceania

• Redirecting Black Sea volumes - producers in Russia and Kazakhstan are scrambling to redirect their volumes to alternative routes as ongoing storms in the Black Sea keep export terminals closed. It’s not clear when the weather will improve. These terminals usually account for 2 mmb/d of exports, 2% of entire global oil demand. That’s a lot of crude.

• Cambodia opts for LNG over coal - the country has scrapped plans to build a $1.5bn coal plant and will instead build a gas plant to to be supplied by a new LNG import terminal. It would be Cambodia’s first LNG terminal, marking yet another new entrant into the growing LNG market.

🦁 Africa

• Equinor exits Nigeria - the Norwegian company has sold its operations to local company Chappal Energies for an undisclosed sum. Equinor has been working in Nigeria since 1992 and its portfolio includes a stake in the major Agbami field.

• Gabon preempting Carlyle’s sale to M&P - the country’s NOC is exercising its right of first refusal to acquire Carlyle’s Assala Energy. Carlyle had agreed to sell the assets to M&P for $1.3bn to Maurel & Prom but it looks like Gabon Oil Company will spoil M&P’s party.

🌍 GEOPOLITICS & MACRO

• Trouble brewing on the Venezuela / Guyana border - Brazil’s army is reportedly on high alert in response to intelligence that Venezuela may be about to invade Guyana and already has troops on the border. Venezuela claims sovereignty over the large and oil-rich Esquiba territory in Guyana. Safe to say that if Venezuela invades, those US sanctions will snap back faster than they can say ‘mierda’.

• OPEC+ talks go down to the wire - with the official meeting due later today, its still unclear if OPEC have reached an agreement over their plans for next year. Further cuts of 1-2 mmb/d are rumoured to be in discussion. There’s still a possibility that today’s meeting will be delayed.

• Saudi’s olive branch to Iran - Saudi has offered Iran investment and cooperation in return for Iran helping to contain the Israel / Hamas war and prevent escalation. The proposal was reportedly issued two weeks ago when Iranian President Ebrahim Raisi met Saudi Crown Price MBS at the Gaza Summit conference in Riyadh.

• Panama’s Suez contagion - a Greek shipping giant has warned that the congestion at the Panama Canal will likely result in delays at the Suez Canal. Many vessels avoiding the Panama Canal are having to transit the Suez instead. The blockage at Panama could also put upwards pressure on shipping rates, the company said.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Germany may throttle EVs and heat pumps to protect the grid - Germany’s energy transition is going from strength to strength...The country’s grid operator has said it may need to restrict the flow of power to EVs and heat pumps in 2024 to preserve the stability of the grid. What did they expect when they decided to stuff their power mix with unreliable generation capacity while at the same time significantly increasing electricity demand through EVs and heat pumps?

• UAE responds to COP criticism - following claims that the UAE was taking advantage of its position as the COP host to broker O&G deals, COP President Sultan Al Jaber (and ADNOC CEO) said: “These allegations are false, not true, incorrect…Do you think the UAE, or myself, would need COP to establish business deals or commercial relationships?”.

🛢️ BOTTOM OF THE BARREL

The UAE is copping some flak for apparently using COP as an opportunity to broker O&G deals (so what if it is?).

But what environmentalists - who have balked at the idea of a major hydrocarbon producer hosting the climate summit - may not realize is that the UAE has added more clean power generation over the past 5 years than any other country on earth thanks to a major nuclear build out:

The UAE is also geographically and symbolically a bridge between the West and East, the North and South, producers and consumers, and all their differing economic and climate priorities.

If a global energy transition is to stand any chance of success it needs buy in from across the whole world.

The UAE is ideally placed to broker such a consensus.

👋 BEFORE YOU GO 

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