7th October 2024

Happy Monday all. Here’s what’s been happening in the wonderful world of oil & gas:

• 🟢 BP coming to its senses

• 💸 Chevron in $6.5bn sale

• 🔙 Biden backtracks

• 🤡 The CCS delusion

• ➕ plus Tupi’s getting bigger; rig count slides; Saudis staying neutral; Eni courts China; new methane regs move ahead; EU goes after China EVs; Total considers copper trading; Italgas’ $5.8bn buy.

Let’s go…

📈 THE NUMBERS

🗞️ WELL-HEADLINES

 🗽 North America

• Chevron in $6.5bn Canada sale to CNR - Chevron sold its 20% stake in the Athabasca Oil Sands Project, and a 70% holding in the Duvernay shale, with combined net production of 84 kboe/d, to CNR in an all cash deal. Chevron is trimming down its non-core portfolio following its Hess mega merger.

• Rig count slips again - after falling by 4 last week, oil rigs in the US came down by another 5 last week to 479. It looks like lower oil prices (prior to the recent surge) are finally feeding through into reduced drilling activity in the US shale patch.

• Tellurian shareholders approve Woodside takeover - the deal, announced earlier this year, should provide Tellurian’s troubled Driftwood LNG project with the financing it needs to move forward.

• New methane regs move forward - the US Supreme Court shot down calls from the O&G industry to halt new EPA rulings that propose to restrict flaring and increase methane monitoring requirements at oil & gas operations in the US.

• Infinity Natural going public - the Appalachian basin-focused E&P is looking to list on the NYSE. Reducing interest rates in the US are encouraging a spate of IPOs (lower interest rates generally lead to higher stock prices as it becomes less attractive to hold capital in cash and bonds and more appealing to invest in stocks).

🏰 Europe

• BP finally thinking straight - the company is rumoured to be about to abandon plans to reduce O&G output by 2030 under its new CEO. Back in 2020, it revealed the remarkable plan to cut O&G output by 40% by 2030 but it now sounds like it’s come to its senses. Have E&Ps reached peak ESG? Let’s hope so.

• Italgas buys rival for $5.8bn - the Italian gas distributor acquired competitor 2i Rete Gas, creating one of the largest companies of its kind in Europe with over 155,000 kms of gas pipelines.

🕌 The Middle East

• Qatar looking for home grown - the gas rich nation has launched a program to increase the quantity of local content in its O&G contracts. Good news for Qatari businesses, not so great for international contractors.

⛩️ Asia & Oceania

• Eni courting Japanese gas buyers - the Italian major is in talks with Japan to sign its first long-term LNG supply contract with the world’s second largest LNG importer. Eni is also developing new gas projects in Southeast Asia and is hoping that Japanese financial institutions can support some of these projects.

🦁 Africa

• BP and Exxon eyeing up Egypt - C-suite execs from both majors have met with Egypt’s Petroleum minister to discuss the their plans in the country. Egypt’s output has been in decline and will be very keen for help stopping the rot.

🗿 Central & South America

• Tupi’s big is going to get bigger- Petrobras is set to further develop the giant offshore Tupi oilfield in Brazil once it reaches an agreement with the regulator. Tupi is the country’s largest producing field, and the first producer in Brazil’s prolific Santos pre-salt region, with current production of ~800 kb/d.

🌍 GEOPOLITICS & MACRO

• Biden backtracks - as expected, the US doesn’t actually support Israeli strikes on Iranian oil infrastructure, despite Biden’s mutterings last week. He has since said that “I were in their shoes, I’d be thinking about other alternatives than striking oil fields.” The US knows that an oil war in the Middle East will send oil prices into orbit and be terrible for the global economy. It’s not in their interest. Or in many people’s, for that matter.

• Saudis staying out of it - Saudi and its Gulf Cooperation Council allies are reported to be reassuring Iran that they remain neutral in its conflict with Israel. The Arab states are concerned that Iran may respond to any attack on its oil infrastructure by attacking other energy facilities in the region, including those of long-term adversary Saudi Arabia.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• EU slaps heavy tariffs on Chinese EVs - the EU has decided to impose tariffs of up to 45% on imports of Chinese-made EVs, despite protestations from Germany, (which fears retaliation). Surely if you want to encourage EV take-up you should welcome lower cost vehicles, not drive up prices and kick-off a trade war? Europe can’t decide if it wants to protect its industry or force through its green agenda. It can’t have both.

• Total’s copper trading foray - the major is considering expanding into trading copper, a metal that is fundamental to electrification and decarbonisation efforts. Majors already have lucrative trading divisions in crude, gas and products, so it shouldn't be much of a stretch to dip their toes into metals.

🛢️ BOTTOM OF THE BARREL

The CCS delusion:

👋 BEFORE YOU GO

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

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