4th April 2025

Morning ladies and gents. Here’s what’s up today in the world oil, gas, and energy:

• ⏬ Cratering crude

• 🎁 OPEC’s nasty surprise

• 🌮 Rationing tortillas

• 😵 Net Zero’s latest victim

• ➕ plus market meltdown; Helge Lund steps down; Elliott ramps up pressure on P66; Conoco selling Oklahoma assets; global coal capacity keeps climbing; Total buys Canadian renewable portfolio; and barrels more.

Have a top weekend. Catch you Monday.

📈 THE NUMBERS

After taking a hammering yesterday, falling by ~7%, WTI is down another ~7% this morning amid a perfect storm of Trump trade tariffs and OPEC’s surprise announcement that it was accelerating its production increases.

O&G producers’ share prices have unsurprisingly been battered too, with the S&P O&G Index down 10% yesterday, and it will be another bloodbath when markets open again today.

Rough couple of days. TGIF.

🗞️ WELL-HEADLINES

 🗽 North America

• Conoco lining up $1bn Oklahoma sale - the US indy is rumoured to be selling some of the assets it acquired as part of its Marathon Oil takeover last year. The assets in question produce ~39 kboe/d across roughly 300,000 net acres, and could be worth up to a billion.

• Elliott ramps up pressure on Phillips 66 - the activist investor, which owns a $2.5bn stake in P66, said that the company’s stock price could almost double to $200 if it sells its midstream business and puts more focus on refining. Elliott is pushing for a shake up of leadership at P66 to advance its goals.

• Japan eyeing up Alaska LNG investment - resource poor Japan is always on the hunt to secure international supplies and Mitsubishi is apparently considering an investment in the under development $44bn project.

• US crude inventories jump - they rose by 6.2 mmbbls last week to 440 mmbbls, contrary to analyst expectations of a 2.1 mmbbls draw. The build was driven by a sharp increase in Canadian crude imports, likely ahead of the new tariffs.

• Brookfield lands Colonial Pipeline for $9bn - as rumoured and reported earlier in the week, so I won’t waste your attention span by repeating the details.

• Forecasters predict busy 2025 Atlantic hurricane season - not what O&G producers in the Gulf of Mexico America want to hear.

🏰 Europe

• Helge Lund steps down as BP chairman - not long after activist investor Elliott took a stake in the company and put pressure on management to return its focus to oil and gas. Helge Lund took up the position in 2019 and will remain in the post until 2026 while a successor is found.

• Petrofac bags much needed contracts - the verging-on-bankrupt services company landed several contracts worth $500m for “late life asset management, decommissioning and integrated services”.

🕌 The Middle East

• They’re already off for the weekend over there so nothing much to report.

⛩️ Asia & Oceania

• India’s gasoline demand has a decade more of growth - one of the country’s largest refiners expects gasoline demand in the world’s most populous country to keep growing for another decade, before EVs begin to erode demand.

🦁 Africa

• Rhino Resources lines up wells in emerging South Africa basin - the indy plans to drill 6 wells in the onshore Karoo basin which is an area known for its natural gas, helium and hydrogen prospectivity.

🗿 Central & South America

• Mexico’s struggles continue - the country has revised down its oil production expectation for 2025 by 129 kb/d to 1.76 mmb/d. Mexico has been trying in vain for years to stem the natural decline in output from its aging sector, not helped by the ~$100bn of debt that Pemex, its state oil company, is laden with. Pemex oil workers have even had to ration tortillas as finances dry up.

• BP celebrates first gas from Trinidad project - the offshore Cypre project includes seven wells tied back to the Juniper platform and is expected to produce ~45 kboe/d at peak.

🌍 GEOPOLITICS & MACRO

• Market meltdown - US stocks suffered their largest daily fall yesterday since Covid, with the S&P500 losing a combined $2.4 trillion in value, as markets feared the economic impact of Trump’s sweeping “Liberation Day” tariffs. Trump’s massive gamble hopes that the US economy will “boom” as the tariffs encourage a shift to domestic manufacturing. I’m not so sure: given the global nature of almost every supply chain, US manufacturers who import supplies and parts from abroad will suffer too, not to mention the general reduced demand in the economy caused by higher prices. Time will tell…

• OPEC’s nasty surprise - the group announced yesterday that it was going to increase output by 411 kb/d in May, notably higher than expectations of 135 kb/d. The increases are part of its effort to unwind 2.2 mmb/d of cuts. OPEC cited "continuing healthy market fundamentals and the positive market outlook" - the oil price since then begs to differ. Is this a warning shot by lowest cost producers like Saudi to other the OPEC members to force better compliance with cuts?

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• UK steel the latest victim of Net Zero - the birthplace of the industrial revolution will likely soon no longer produce any virgin steel as British Steel is set to cease operations at its final two blast furnaces in Scunthorpe. The company reportedly loses £700k per day and its Chinese owner has cited high energy and environmental costs as a key reasons for its struggles.

• Global coal capacity keeps climbing - last year 44.1 GW of new coal capacity came online, while 25.2 GW was retired. 70% of the new capacity came in China. Total coal generation capacity is now ~2,175 GW - a 259 GW increase since the Paris Agreement was signed in 2015. What energy transition?

• TotalEnergies buys Canadian renewable portfolio - the acquisition of the Alberta-based renewables portfolio from UK developer RES includes an operational solar farm and 600 MW of wind and solar assets still under development.

• BP makes more low-carbon job cuts - the company is closing its team focused on hydrogen and liquefied natural gas for transport, especially trucks. The pursuit wasn’t “commercial viable”, BP said.

🛢️ BOTTOM OF THE BARREL

👋 BEFORE YOU GO

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

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