30th September 2024

Hi everyone. Hope you had a top weekend. Here’s what we’ve got for you today in all things oil, gas, and energy:

• 💥 Netanyahu’s Godfather moment

• ⏬ Rig count finally reacting?

• 😬 Surveying Helene’s damage

• 🥂 Finally some good news in the UK

• ➕ plus Russia wants justice for Nord Stream II; Chinese stocks surging; Pemex’s demise; heat-pump sales are sinking; Conoco’s PDVSA win; Oregon cancels offshore wind plans; Elliott wins Citgo auction.

Let’s take a look.

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📈 THE NUMBERS

Geopolitical risk in oil prices may be creeping back into focus after Israel went turbo on Hezbollah over the weekend, raising the possibility of more direct Iranian involvement.

🗞️ WELL-HEADLINES

 🗽 North America

• Surveying the damage - almost all production in the GoM has been reinstated after Hurricane Helene, which at its peak last week took off 500 kb/d (~25%) of GoM production. Including the impact from Francine, GoM production for the whole of September will be down about 190 kb/d. Onshore, dozens were killed and millions left without power.

• Rigs finally reacting? - the US rig count fell by 4 last week to 484. It might still be too soon to tell but, after many weeks of minimal movement, this larger drop could be a sign that US drilling activity is finally beginning to slow in the face of declining oil prices over the past ~6 months.

• Elliott affiliate wins Citgo auction - the PE firm was named the presumptive winner of an auction for Citgo Petroleum with a bid of $7.3 bn. Citgo is a US refining company owned by Venezuela and is being sold off to pay PDVSA debts.

🏰 Europe

• Russia wants culpability for Nord Stream sabotage - Russia is preparing to go to the International Court of Justice if the West fails to investigate the destruction of the Nord Stream II pipeline. “The West will not get away with the attempts to 'sweep the matter under the carpet'.", it said. Whodunnit?

• Energean lining up more M&A - after selling parts of its Mediterranean business to Carlyle for $945m in June, the UK-based indy has said it’s now looking to grow via acquisitions of its own. It hopes to sell its UK portfolio though, which its CEO described as a “liability”.

• Petrofac shares sink ~25% on large losses - the financial troubles keep piling up for the troubled OFS company.

• UK sanctions 5 Russia-linked LNG tankers - I’m sure the Russians are shaking in their boots.

🕌 The Middle East

• A quiet weekend in this neck of the woods.

⛩️ Asia & Oceania

• Mitsubishi increases stake in giant MLNG - the Japanese trader has acquired 10% stakes in the Dua and Tiga units of the Petronas’ giant Malaysia LNG plant which has a total capacity of 29.3 mtpa. The value of the deal wasn’t disclosed. The project is a vital source of gas supply for import-dependent Japan.

🦁 Africa

• Not much happening here either.

🗿 Central & South America

• Pemex’s demise - the drowning-in-debt Mexican NOC saw its oil production fall by 6% year-on-year in August to 1.77 mmb/d. Output is falling as its largest fields mature and decline, without sufficient investment elsewhere to bring new barrels onstream. Investment, though, is being choked by Pemex’s high debt, which is equivalent to almost 6% of Mexcio’s entire GDP. Dios mío!

• Conoco wins PDVSA cash seizure ruling - a court has approved Conoco’s request to seize payments that PDVSA would have received for its interest in the Dragon Gas project in Trinidad. Conoco is seeking to recuperate billions from Venezuela for forced nationalization of its assets.

🌍 GEOPOLITICS & MACRO

• Israel obliterates Hezbollah - a series of huge IDF airstrikes on the Hezbollah HQ in Lebanon (using at least 15 1-ton bunker busting bombs) have killed the group’s powerful leader, Hassan Nasrallah, and scores of its other top commanders.

  • Combined with the recent pager and walkie-talkie blasts, Israel has wiped out the entire Hezbollah top brass in just a couple of weeks. That’s quite the turn around for Israel’s intelligence services after the failings of 7th October.

  • Hezbollah (or what’s left of it) is strongly supported by Iran so all eyes are now on Tehran to see how it will react to the destruction of its vassal group. It has promised revenge, as it so often does…

• Chinese stocks going vertical - the Shanghai stock index popped by a whopping 8.5% today, its largest daily jump since 2008 as investors get excited by the government’s latest raft of stimulus measures. Bullish oil? Maybe a little. Short-lived? Probably.

• US “studying very closely” more Venezuelan sanctions - after the dodgy presidential election last month, the US has refrained from cranking up the sanctions heat on Venezuela, but that option is still very much in play, according to a senior US official.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Oregon cancels offshore wind auction - due to a lack of interest from developers…This is the second time this year the US government has cancelled an offshore wind auction after it shelved plans in the Gulf of Mexico in July. More setbacks for Biden’s 30GW offshore wind capacity target by 2030.

• European heat-pump sales tumbling - in the first half of this year, heat-pump sales fell by 47% compared with last year. EU governments have set ambitious targets for heat-pump installation but, like EVs, most consumers have yet to be convinced on their cost and efficacy.

• Just Stop Oil activists jailed for throwing soup on a Van Gogh - finally, some good news.

• Don’t do it Colombia - the South American country wants to spend $40bn on transitioning away from hydrocarbons. Even rich countries like Germany and the UK are suffering immensely as they blindly chase the “energy transition” rainbow, so I dread to think the damage that could be done if less prosperous economies like Colombia try to go down that path.

🛢️ BOTTOM OF THE BARREL

Excuse Lee’s French.

👋 BEFORE YOU GO

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

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