31st March 2025

Back in business!

Please forgive the hiatus. Demands of the day job caught up with me over the past month or so but the worst of the storm has now passed.

I’ll do my best to stay consistent with these but sometimes life gets in the way.

Anyway, where were we?

Here’s what’s been going down in all things oil, gas, and energy over the weekend:

• 😤 Trump is “pissed”

• 📈 Never bet against US shale

• 💣 Going after Russian gas infra

• ✨ Energy is Life

• ➕ plus $65/bbl breakeven for US shale; China’s new stimmy; Glenfarne takes Alaska LNG stake; Kuwait taps debt markets; CNOOC hits the jackpot; Shell axes Brazilian renewables; cranking up the pressure on Venezuela; incoming LNG glut no bad thing; and barrels more…

Let’s go…

📈 THE NUMBERS

The recovery continues for US gas producers, with Henry Hub now up ~130% over the past 12 months.

After a couple of years in the doldrums, with prices well below $2 at one stage (the equivalent of ~$10/barrel of oil equivalent), it’s about time the picture brightened for US gas drillers.

🗞️ WELL-HEADLINES

 🗽 North America

• Texas hits new O&G production records - reports of a US shale demise have been greatly exaggerated. Despite predictions that US shale output could peak in 2024, for the first time in history Texas produced over 2 billion barrels of oil in the year (and 62 tcf of natural gas). If I’ve learned anything over the past ten years, its to never bet against US shale.

• $65/bbl WTI needed for US onshore breakeven - the latest Dallas Fed Energy Survey shows that US O&G producers expect costs to rise slightly due to tariffs on steel. They survey said that the “the key word to describe 2025 so far is “uncertainty””, thanks to geopolitical unrest and changing US government regulation.

• Glenfarne takes 75% stake in Alaska LNG - the energy company will assume the role of the lead developer of the giant 20 mtpa LNG terminal and 807 mile pipeline being built in Alaska as the US’ only Pacific Coast export terminal.

• Rig count edges down - operational oil rigs in the US fell by 2 last week to 484. Gas rigs meanwhile were up by 1 to 103. The rig count remains persistently range bound around the ~480 mark as drillers look to have found a sort of equilibrium at current crude prices.

🏰 Europe

• Gas infra in Russia’s Sudzha “virtually destroyed” - a key Russia-to-Europe gas transit hub in eastern Russia which had been seized by Ukrainian troops, is apparently up in flames after a Ukrainian attack. Ukraine clearly wants to make it as difficult as possible for Russian gas to flow back to Europe in the event of a ceasefire agreement. The inextricable link between energy, geopolitics and war never ceases to fascinate.

• LNG fills the void - LNG, especially from the US, has been the big winner since the Ukraine war broke out, and that looks set to continue as Europe is currently importing its highest ever level of the super chilled gas for this time of the year. European LNG import volumes have been boosted by tepid demand in Asia (the competing market for LNG) which has pushed global LNG prices down.

• Wood Group shares take a battering - the UK-based oil services company lost 25% of its value on the stock market this morning after announcing accounting errors and “material weaknesses” in the business. The company is having to reissue historical financial statements. Ooops.

• “Act now to restore confidence” - a UK North Sea business group is urging the government to reduce the 78% marginal tax rate in the UK as it’s throttling new investments. Many UK operators have warned the sky high taxes spell the end for new investment into the UK, leaving £ billions of resources in the ground.

🕌 The Middle East

• Kuwait looks to debt markets - unlike other OPEC heavyweights Saudi Arabia and the UAE, which have borrowed on international debt markets to invest, Kuwait has, by law, blocked itself from raising debt for the past 8 years. This is about to change as a new law is passed. The borrowing will be used to finance projects that diversify the economy away from hydrocarbons.

⛩️ Asia & Oceania

• CNOOC strikes gold in South China Sea- the company claims that the Huizhou 19-6 oilfield holds proven reserves of over 700 mmbbls of oil. It apparently marks a breakthrough in China's offshore oil exploration, as the country's first large-scale integrated clastic oilfield discovered in deep to ultra-deep layers. A geologist will be able to explain to you why that’s significant. I can’t.

• Jadestone set for new drilling at Montara - the Asia-focused indy is spending $62m to drill a new well at its mature offshore Australia oilfield.

🦁 Africa

• A quiet weekend in these parts

🗿 Central & South America

• Not much happening here either.

🌍 GEOPOLITICS & MACRO

• Trump is “pissed off” with Putin - the US president isn’t pleased about the lack of progress on a deal to stop the war in Ukraine and has said if no deal is reached within a month he will impose 50% tariffs on countries buying Russian oil. China and India would be impacted the most by such a measure. He’s cranking up the pressure…who blinks first?

• China pumps $72 bil into its economy - the government’s latest attempt to revitalize the stuttering economy involves injecting the cash into 4 large state owned banks which can then lend that money out to spur investment.

• LNG glut could be a good thing - “A period of lower LNG prices is a good thing,” Shell’s CEO commented, “it means that we are able to continue to shift some of the coal demand that’s out there to lower-carbon gas.”. Large volumes of new LNG capacity are due on stream in the coming years, especially in the US, which should help bring down today’s high prices of ~$13/mmBtu.

• Venezuela, you have been warned - the US Sec. of State has warned Venezuela that “if they were to attack Guyana or attack Exxon Mobil … it would be a very bad move. It would be a big mistake…There will be consequences for adventurism” Tensions have been rising between the neighbours as Venezuela makes claims over large swathes of oil rich Guyana. Meanwhile, the US is revoking permits granted by the Biden government that had allowed international companies like Repsol, Chevron, and Eni to export Venezuelan oil.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Shell axes Brazil renewable projects - the great renewables about-face by the majors continues apace. Shell is “discontinuing” solar and onshore wind projects in Brazil as part of a “portfolio adjustment”. The move follows Shell's new global strategy, which includes, like many others, a reduction in spend on low-carbon and renewable businesses.

• Norway’s oil fund spends $1.5bn on wind farms - the giant sovereign wealth fund is buying a 49% stake in two giant under-construction wind farms in the North Sea from RWE.

🛢️ BOTTOM OF THE BARREL

“Energy is Life”. Amen to that.

This guy should set global energy policy.

👋 BEFORE YOU GO

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

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