31st January 2024

Hello crew, we survived January. Nice one. Here’s what’s up today in all things oil, gas, and energy:

• 😬 World waits, Iran warns

• 💸 Aramco selling more shares?

• 📉 OFS hit by Saudi capacity cut

• 🤝 OMV divests Sapura stake

• ➕ plus new life for nuclear plants; big money contracts in Qatar; earnings season underway.

I’m experimenting with sending this at a different time today. Let me know what you think.

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Saudi capacity move hits OFS shares - the shares of US OFS companies SLB, Weatherford, Baker Hughes and others all took big falls yesterday following Saudi’s reversal of its capacity expansion plans that is likely to reduce demand for OFS services in the Middle East. Saudi represents ~7% of global oil capex and 11% of total offshore capex to 2030, and the move is estimated to reduce its capex spend by $21bn.

• Permian Resources in New Mexico buy - the company has done two deals worth $175m in total to acquire acreage across New Mexico. Last year Permian Resources acquired Earthstone Energy for $4.5 bn to strengthen its presence in the Delaware Basin.

• Enbridge cutting 650 jobs - the North American pipeline operator is reducing its workforce by ~5% due to “increasingly challenging business conditions”.

• Some Q4 earnings highlights: high Bakken and Guyana output helps Hess beat estimates; P66 reports solid results on strong refining margins.

• Crude and gasoline stocks creep up - US crude inventories rose slightly by 1.2 mmbbls last week, compared with analyst expectations of a 0.9 mmbbls draw. Gasoline stocks rose by 1.6 mmbbls. The numbers have normalized after a crazy few weeks due to the US winter storm.

🏰 Europe

• UK awards 24 exploration licences - Shell, BP, Equinor and others landed acreage in the North Sea and West of Shetlands. The regulator said there were “more to come”. Put that in your pipe and smoke it, Greenpeace.

• UK’s Grain LNG signs Sonatrach extension - the deal gives the Algerian company long-term storage and 3 mtpa of regas capacity at Europe’s largest LNG import terminal. The Grain terminal is currently being expanded to store and deliver enough gas to meet up to 33% of British gas demand.

🕌 The Middle East

• Aramco considering $10bn more share sales - after it raised $30bn in its IPO in 2019, the Saudi NOC is rumoured to be lining up the sale of more shares on the public market. It sold ~1.7% of its shares in its IPO so there’s plenty more where that came from.

• IOCs seek US help for Kurdistan export restart - international producers are calling on the US government to help unlock the stalemate that is keeping the major 450 kb/d crude export pipeline from Iraqi Kurdistan closed. The pipeline was originally closed in March due to a spat between Turkey and Iraq, but now it seems the disagreement is between the Iraqi government and oil producers.

• Qatar awards big money contracts - the emirate has dished out $6bn of EPC contracts to various international companies to increase production from the Al-Shaheen oilfield, Qatar’s largest, by 100 kb/d to ~ 700 kb/d.

⛩️ Asia & Oceania

• OMV sells SapuraOMV stake to Total - Total is paying $903m for OMV’s 50% interest in the Malaysian-headquartered JV. SapuraOMV’s main assets are its 40% operated interest in block SK408 and 30% operated interest in block SK310, both located offshore Sarawak in Malaysia.

• AG&P LNG import terminal plans - the company plans to build six new LNG import terminals with a total capacity of 25 mtpa across South and Southeast Asia and expects to take FID on the projects in the next one or two years. “The common theme across Southeast Asia is domestic gas is declining. LNG is the only way to keep gas-fired power plants going", the CEO said.

🌍 GEOPOLITICS & MACRO

• World waits, Iran warns - without elaborating, Biden said he has decided on a response to the attack on a US base in Jordan that killed 3 US troops. “I do hold them [Iran] responsible in the sense that they're supplying the weapons to the people who did it", the US president commented. Iran has warned that it would itself respond decisively to any attack on its interests. Here we go…

• US prepares to reimpose Venezuela sanctions - the US has started ordering entities involved with some Venezuelan businesses to start unwinding their operations ahead of a snap back of sanctions. I wonder how this will impact Maduro’s calculations over Guyana. Will he now feel he has much less to lose?

• Germany ain’t happy with the US LNG pause - "US LNG exporters have made significant efforts to replace Russian gas supplies in the last two years. We are therefore extremely critical of the announced stop to the approval of new LNG terminals…They are driving the energy price gap between the US and Europe further apart and worsening the conditions here", said CEO of German gas industry group Zukunft Gas.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• “No nation has achieved industrialisation solely through solar or wind power” - Namibia’s Energy Minsiter is saying it how it is. He said Africa’s development is being hit by a double whammy of an oil & gas investment shortage, and insistence on renewables. You can’t argue with that.

• New life for nuclear plants - the Pickering Nuclear Power Station near Toronto is to get a $1.5bn refurbishment that will extend its life by 30 years. The plant will be needed to help meet the region’s growing power demand which is expected to double by 2050 due to EVs and a general electrification push. Well done Canada. The US is also providing a $1.5bn loan to reopen the Palisades nuclear power plant in Michigan.

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO 

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