30th October 2023

Hello, hello, Both Barrels team. Here’s what dropped over the weekend in all things oil, gas and energy:

• 😬 Tengiz costs climb, Chevron shares sink

• 🐶 Life in the old UK dog yet

• 🚨 Energy shortages in Egypt and Argentina

• ➕ plus TC Energy selling down, Germany hunts for gas, China and India coal gorge, wind or whales?

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• TC Energy selling down - the Canadian pipeline operator is rumored to be offloading several billion dollars worth of assets to free up cash to pay down debt and make investments.

• Rig count edges up again - oil rigs climbed by 2 to 504. After several months of decline, it looks like the rig count might finally be bottoming out. There’s usually a ~3 month lag between oil price movements and the rig count.

• Some Q3 earnings highlights: Exxon hunting for more deals but falls short of profit estimates; Chevron’s share price fell 6% on higher costs and profit miss; lower margins hit Phillips 66 bottom line.

• Baton Rouge refinery back to full operations - Exxon restarted a coker unit that had been out of action for several weeks.

🏰 Europe

• Life in the old UK dog yet - in the first licencing round since 2019, the UK has awarded 27 new exploration licenses in the North Sea to bidders including Shell, BP, Equinor and others. Some companies didn’t bid, blaming the punitive new O&G windfall tax, but the round demonstrates there’s still appetite for this aging province. In 2000, the UK produced 4.4 mmboe/d, more than Iraq. Today output is just 1.3 mmboe/d

• Wintershall DEA getting leaner - as it works to recover from the hit to its Russia business and prep for a possible sale, Wintershall DEA is moving forward with 500 job cuts and other cost cutting initiatives.

🕌 The Middle East

• New licenses in the prolific East Med - keen to build on recent success in the province, Israel has awarded 12 new exploration licenses to IOCs in waters close to the giant Leviathan field.

⛩️ Asia & Oceania

• More Tengiz cost overruns - Chevron said costs at its mega $45bn Tengiz expansion project in Kazakhstan will rise by 4% as production start-up has been delayed until the end of 2024. The project is vast and complex, with plenty of Soviet-era infrastructure needing to be replaced.

• Vietnam’s largest LNG terminal up and running - the 1 mtpa Thi Vai import facility was fired up on Sunday.

• Eni bullish on Indonesia - after its recent 5 tcf Geng North 1 discovery, Eni hopes it can double its gas production in the southeast Asian country.

🦁 Africa

• Germany looks to Nigeria for gas - energy-strapped Germany is planning to invest more in gas and mineral projects in Nigeria, said Chancellor Scholz on a trip to the country. In particular, Germany has its eyes on LNG exports as it desperately works to replace Russian gas.

• Egypt’s energy woes - the country has suffered more power cuts as gas imports fell to zero over the weekend. Egypt relies on gas from the recently shut Israeli Tamar gas field and its own domestic production is falling while demand climbs.

🗿 Central & South America

• Argentina’s fuel shortages - the government has threatened to ban exports of fuel to tackle domestic shortages. Long lines and fuel rationing were seen over the weekend at gas station across the economically beleaguered country.

🌍 GEOPOLITICS & MACRO

• Intensity rising in Gaza - Israel has expanded its ground operations in the Hamas-controlled enclave and reported intense fighting between its troops and Palestinian militants. Meanwhile:

  • Saudi Arabia issued a strongly worded government statement warning of “serious repercussions” of Israel’s military operations.

  • Israel PM Netanyahu stopped short of saying Iran helped plan the terrorist attacks but said “it finances, it organizes, it directs, it guides” Hamas.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• “The final phase of Norwegian petroleum activities” - this is what Norway’s climate change committee said the country should prepare for. It also recommended that all new E&P permitting is halted. Good idea, starve your golden goose.

• EU pushing to ban financial support for foreign hydrocarbon investments - the proposal, to be made at an OECD meeting next month, would prohibit the EU from providing public financing to international oil, gas, and coal projects. Not only would such a move deny developing countries the ability to develop critical energy resources, but it also won’t work. Other players like China will gladly step in to fill the financing void.

• China and India expect coal gorge this winter - the two largest consumers of coal are preparing for high power demand this winter by boosting domestic production and increasing imports. Security of supply will always be the number one, two, and three priority….

🛢️ BOTTOM OF THE BARREL

The environmentalists’ dilemma: wind or whales?

👋 BEFORE YOU GO 

Any feedback, requests, terrible jokes? Please click the poll above or just ping a reply to this email and let rip.

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