5th February 2024

Hello hello. Hope you all had a top weekend.

Here’s what hit the wires in all things oil, gas, and energy:

• ⚔️ Exxon fights back against “extreme agenda”

• 🛑 Wind farm fraud

• 💸 US majors making bank

• 💣 America retaliates 

• ➕ plus rate cuts around the corner, steadying China’s stock market; UK Freedom Gas

Let’s go…

📈 THE NUMBERS

Last week crude prices fell by ~$6/bbl, their worst weekly performance in four months, even while things are kicking off in the Middle East.

🗞️ WELL-HEADLINES

 🗽 North America

• Exxon fighting back - Exxon said it will continue its lawsuit against activist investors Arjuna Capital and Follow This even after the investors backed down in their attempts to impose additional climate targets on the company. It’s refreshing to see an oil company standing up to the “extreme agenda”, as Exxon called it. More should do the same.

• Some earnings highlights - Exxon beats forecasts and reports second highest annual profits in a decade, Chevron also surpassed expectations despite impairment hits to profit, and raises dividend. The two heavyweights expect increases in production of 7% and 10% respectively in 2024.

• Two refineries back in action - Total’s Port Arthur refinery restarted on Friday following 2 weeks offline due to a power outage, and BP’s 440 kb/d Whiting refinery is also up and running again after suffering from a power outage last week that resulted in an evacuation.

• US oil rig count stays flat - at 499 rigs in total. Across basins, the Permian saw a small gain of 1 rig while the Eagle Ford lost two rigs.

🏰 Europe

• Germany confirms gas plant plans - after eventually realizing that it’s not possible to run a modern economy on wind and solar, Germany’s government has confirmed plans to build 10GW of gas power plant capacity. The plants should be built so they can be fully switched tow hydrogen between 2035-40.

• More Freedom Gas for the UK - the 16-year deal involves Venture Global supplying 3 mtpa of LNG to the Grain LNG terminal in the UK, starting in 2029. The only issue is that one of Venture Global’s proposed projects is in limbo due to Biden’s approval freeze…

🕌 The Middle East

• Qatar’s Mitsui condensate deal - the supply deal involves 11 mmbbls of condensate per year for 10 years starting in April. Condensates are the by-product of the natural gas production process and are often used in the production of gasoline.

• The Middle East’s biggest refinery going at full tilt - the Al-Zour refinery in Kuwait has hit full capacity for the first time (615 kb/d) since commercial operations began back in 2022.

🦁 Africa

• More success for Total in Namibia - the company has made another discovery in the prolific offshore Orange Basin with its Mangetti-1X well, although it’s too early to confirm the extent of the find.

• Shell takes FID on Nigerian gas facility - the facility will supply 100 mmcf/d day of gas from the Iseni field to the mammoth Dangote Fertiliser and Petrochemical plant for 10 years.

🌍 GEOPOLITICS & MACRO

• The US retaliates - the US struck more than 85 targets in Iraq and Syria linked to Iran's Revolutionary Guard and militias it supports, reportedly killing nearly 40, in retaliation for the recent deadly attack on US troops. In a serious flex, the US used long-range B-1 bombers flown from the US and warned more military operations were incoming. Iran obviously wasn’t too happy, while Iraq is pissed that its territory is being used for “settling scores”.

• More backlash to Biden’s LNG move - it will “erode confidence” in the LNG industry said Shell’s CEO. A “mistake” that will slow efforts to reduce climate-damaging emissions, said Exxon’s CFO. Anyone with a basic understanding of the energy system can see it’s a dumb move, but Biden’s hoping it will be a vote winner in the election latest this year. I wouldn’t count on it, Joe.

• Rate cuts around the corner - the US Fed expects to make three interest rate cuts this year, said Chair Jerome Powell. He didn’t give a precise timing but most expect the first cuts around June. This will be welcome news to markets grappling with the current rates of 5.25% to 5.5%, their highest levels in over a decade.

• Steadying China’s ship - the country’s securities regulator promised action to bring stability to China’s stock market after its core index fell by 5% last week to new five-year lows. The watchdog said it would focus on market manipulation, short selling, insider trading, and fraudulent issuance of shares to help restore stability.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• European wind farm fraud - a Bloomberg investigation has revealed that wind farms in the EU have been overstating their forecast output in order to receive extra payouts from the grid when they are forced to shut down due to over generation. These compensated shutdowns are known as “curtailment” and are one of the many additional costs imposed on the grid, and therefore the end consumer, by the additions of intermittent wind and solar. Now it seems wind farm owners are adding the cherry on top by deliberately defrauding consumers.

• Eni and Indonesia’s low carbon partnership - Eni has outlined plans to develop bio-feedstock for fuels, energy transition initiatives, and carbon capture projects in the South East Asia country where it is also a major O&g upstream player.

• The US new climate kingpin - John Podesta, who is a veteran White House advisor, will take over from John Kerry as the US’ lead climate envoy.

🛢️ BOTTOM OF THE BARREL

It’s no coincidence this divergence in economic fortunes between the US and Europe happened right around the time of the US shale revolution.

Cheap, abundant energy provided by shale gas was a huge shot in the arm for the entire US economy. A true gift from mother nature.

It must suck to be one of those virtue-signalling pension funds or university endowments who bought into the whole “divest” fossil fuel movement which has done nothing other than forgo juicy returns.

👋 BEFORE YOU GO 

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