6th December 2024

Happy Friday crew. Here’s all you need to know in oil, gas, and energy today:

• ✅ No surprises from OPEC

• 🏋️‍♂️ A new UK heavyweight

• 🇨🇳 China’s nuclear wave

• 💡 Shell sees the light

• ➕ plus BP’s US pipeline sale; Chevron’s surprise capex cut; Denmark’s offshore wind flop; Tullow’s CEO quits; CNX Appalachia buy; crude stocks fall; US hybrids race ahead; more problems at Triton; shake up at Jadestone; and plenty more.

Have a top weekend.

📈 THE NUMBERS

Oil prices shrugged off the OPEC+ production hike delays, with many seeing it as a bearish indicator that markets are weak rather than a bullish move that limits supply.

🗞️ WELL-HEADLINES

 🗽 North America

• BP weighing $3bn US pipeline sale - it’s rumoured to be looking to sell a 49% stake in its business that manages and maintains more than 3,200 miles of pipelines and transports 1.1 mmboe of crude oil, natural gas, and refined products every day.

• Chevron’s surprise capex cut - for the first time since Covid, the major has announced plans to reduce spending next year by ~$2bn (vs 2024) to $14.5-$15.5bn, as it focuses on cash flow generation. The vast majority of its budget will be directed towards its US upstream portfolio.

• CNX bags Apex’s Appalachian gas business - the $505m deal includes 36,000 net acres and production of ~180 mmcf/d of gas in the Marcellus and Utica basins.

• Matador sells Pronto subsidiary to its San Mateo JV - the deal values the gas midstream company, which owns the Marlan Processing Plant in Lea County, at ~$600m. Matador owns San Mateo in a 51/49 partnership with Five Point.

• Woodside and Betchel sign turnkey EPC contract for Louisiana LNG - Woodside is set to make a final investment decision on the three train 16.5 mtpa project in Q1 2025.

• Crude stocks fall - inventories shrunk last week by 5.1 mmbbls to 423 mmbbls, surpassing expectations of a 0.7 mmbbls draw. Gasoline stocks, meanwhile, rose by 2.4 mmbbls, slightly more than expected.

🏰 Europe

• Shell and Equinor form new UK heavyweight - the two majors are combining their UK operations to create a new 50/50 owned joint venture that will produce ~ 140 kboe/d, making it the largest producer in the country. It feels like this could be a first step in a UK exit plan for these two European giants.

• Czech Republic readies emergency oil reserves - Russian oil supplies via the Druzhba pipeline suddenly dried up on Wednesday, it’s unclear why. The southern leg of the Druzhba oil pipeline is part of a Soviet-era network that was built to ship crude oil to Europe. Despite sanctions, some eastern European countries are still buying Russian oil.

• More problems at Triton - just weeks after restarting following a technical problem, the Triton FPSO in the UK North Sea has had to shut down again. Serica’s share price fell ~5% on the news.

• Equinor’s renewables boss quits for Statkraft - he’s keeping it in the Norwegian family.

🕌 The Middle East

• All quiet over here

⛩️ Asia & Oceania

• Texcal comes up dry in Sumatra - the PC-01 exploration well at the Mahato prospect in Indonesia hit dust.

• Shake up at Jadestone - CEO Paul Blakeley is stepping down, and Dr Adel Chaouch, currently Non-Exec Chairman, has been appointed Executive Chairman.

• Chevron inks gas supply deal with Singapore - the major will provide 0.6 mtpa of LNG to Sembcorp for ten years, starting in 2028. The island nation is heavily reliant on gas imports to meet its energy needs.

• Malaysia awards new PSCs in bid round - three development opportunities and one exploration block were won by various local players.

🦁 Africa

• Tullow’s CEO on the way out - the Africa-focused company’s already battered share price fell another ~10% after CEO Rahul Dhir announced he was leaving the company next year.

🗿 Central & South America

• Harbour and Pampa invest in Argentina FLNG project - Harbour has taken a 15% interest, and Pampa 20%, in the $3bn proposed FLNG project in Argentina’s Rio Negro that is due onstream in 2027. Argentina is pushing to develop its LNG export capacity to unlock vast gas volumes in its Vaca Muerta shale patch.

• Petrobras and SP FPSO talks falling apart - India’s Shapoorji Pallonji Energy had been vying to provide Petrobras with an FPSO for Brazil’s Barracuda-Caratinga field but it seems that Petrobras is heading back to the market to re-tender.

🌍 GEOPOLITICS & MACRO

• OPEC delays production hike - in the least surprising news of the day, OPEC+ has delayed the start of oil output rises by three months until April and extended the full unwinding of cuts by a year until the end of 2026. OPEC+ is currently holding back about 5.9 mmb/d of output but doesn’t dare release any of it in this fragile market.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Shell says no new offshore wind investments - it looks like Shell has decided to stop wasting money on needless, expensive projects that do nothing but push up everyone’s power bills.

• Meanwhile, zero interest in Denmark’s latest offshore wind auction - People are finally realizing the emperor has no clothes. Take away the subsidies and no one wants to build these things.

• China’s nuclear wave - the country is expected to approve 10 new reactors every year for the next 10 years, to add to the 57 currently in operation and dozens more under construction. The future for China is nuclear, and that will give it a huge competitive edge over the rest of us. Meanwhile, in the UK it takes the government 18 months to fill a pothole.

• US hybrids race ahead of EVs - hybrid vehicles accounted for ~11% of new light car sales in the US in Q3, while fully electric fell to ~7%. Hybrids make much more sense than EVs: they have far smaller batteries (reducing the need for scarce rare earths), solve the problems of “range anxiety” and charging infrastructure, and have very efficient mpgs.

• Cuba in the dark - the island nation’s decrepit grid has collapsed and is producing ~1/6 of what’s needed, leaving millions in the dark. Cuba is also facing gas shortages, meaning people are being forced to cook with firewood. Without energy, you’re back in the dark ages.

• BP invests $25m in emissions reducing value start-up - O&G companies are under pressure to reduce “fugitive” methane emissions - those that escape at various points along the leaky supply chain.

🛢️ BOTTOM OF THE BARREL

Wild to think that just a handful of private companies controlled ~55% of global oil production for nearly 2 decades in the late 1900s.

A wave of nationalisations in the Middle East in the 1970s then changed things rapidly.

👋 BEFORE YOU GO

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

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