17th July 2024

Morning ladies and gents. This is what’s up in oil & gas around the world today:

• 💥Carnage in the Red Sea

• 🇮🇳India’s Permian

• 🥶Arctic LNG’s woes

• ❌$15bn KXL claim thrown out

• ➕ plus reams of squandered gas; Turkey’s time; Kenya rejects Tullow plan; outage at Joliet; Saudi GDP takes a hit, and plenty more.

Let’s go…

📈THE NUMBERS

🗞️ WELL-HEADLINES

🗽North America

• TC Energy’s $15bn KXL claim thrown out - the developer of the ill-fated Keystone XL pipeline was seeking the mahoosive damages after the US government killed the project by revoking its permit in 2021.

• Exxon’s Joliet refinery is down - the 251 kb/d facility in Illinois is shut after a power outage in heavy wind and rain. It’s not clear when it will restart as a full inspection needs to be carried out to check for damage.

• Sunoco and Energy Transfer join forces - the companies are combining their crude and produced water-gathering assets in the Permian Basin, which will comprise more than 5,000 miles of pipelines.

• Alberta oilsands output recovers, heavy oil discount widens - after the threat of wildfires caused significant production shutdowns in Alberta, it appears output has now fully recovered. The discount on Western Canada Select to Brent widened to ~$14/bbl.

• North Dakota oil output edges down - production fell by 49 kb/d in May to 1.195 mmb/d, according to the state’s Industrial Commission.

🏰Europe

• Arctic LNG struggling under sanctions - gas output at Russia’s flagship project, which has started production but has yet to begin exports, sunk to 55 mcm in May, down from ~215 mcm in April. The huge 19.8 mtpa facility has stalled since Western sanctions in 2023 meant that foreign shareholders abandoned the project, taking with them their financing and offtake contracts for the new plant.

• Turkey, the European gas gateway - the country is perfectly situated between Europe’s thirsty consumers and the gas producers of the Middle East and central Asia, and has long been touted as a potentially key gas transit hub. Even more so now Russian piped volumes are offline. Turkey’s energy minister said it is willing to build the required infrastructure but first needs long term commitments from European customers.

⛩️ Asia & Oceania

• India’s Permian - a report has suggested that four unexplored basins in India could hold up to 22 bnbbls of crude oil. For context, the Permian Basin in the US has produced 14 bnbbls of 34 bnbbls of recoverable reserves. Currently, only 10% of India's 3.36 million km2 sedimentary basin is under exploration. So much oil still out there!

🦁Africa

• Kenya rejects Tullow’s Lokichar plan - the government cited Tullow’s weak financial position, questioning how it would finance the development of the 460 mmbbls field after Total and Africa Oil withdrew from the project partnership last year.

• Total hires Rwandan security for Mozambique LNG - the mega project was paused in 2021 after a deadly attack. Thousands of Rwandan troops and private security companies are in Mozambique to help fight the insurgency following a deal between the two countries.

• BW Energy acquires shares in ReconAfrica - the deal is worth up to $140m and will give BW exposure to an emerging onshore play in Namibia.

🌍 GEOPOLITICS & MACRO

• Carnage in the Red Sea - yesterday we noted how the Houthi’s were upping their attacks on ships in the Red Sea. Below is footage of an attack by an explosives-packed drone boat on the Chios Lion oil tanker on the Monday. Houthis state they’ll continue to target ships for as long as Israel’s offensive continues in Gaza.

• Gas flaring could be a $48bn prize - a new report suggests that 267 bcm of gas is wasted every year to flaring, venting, and leakage. This is equivalent to Europe’s entire annual gas production! Capturing and using this gas could generate $48bn in revenue every year.

• IMF slashes Saudi GDP growth forecast - citing oil production cuts, the IMF now expects Saudi’s GDP to grow by 1.7% this year vs its previous forecast of 2.6%. This is despite Saudi’s Vision 2030 spending spree.

💨CARBON, CLIMATE, & OTHER ENERGY STUFF

• US power demand hits hourly record high - it’s getting hot in here. Consumers and businesses cranked up the aircon yesterday across the country on the hottest day of the summer. Thank God for reliable power grids. Let’s keep it that way, shall way?

• Saudi’s $3bn Chinese solar JVs - the kingdom has signed two separate JVs with Chinese solar companies to build solar plants in the country. Saudi has a target to develop ~60 GW of low carbon energy capacity by 2030, vs today’s capacity of ~2.8 GW. I’m fairly skeptical of solar power but if you’re going to build it anywhere, build it in the sun soaked deserts of the Middle East.

• Brewdog abandons carbon neutral status - the popular British beer company (it’s delicious lager, try it) is giving up on its “carbon neutral” status after many of the trees in its carbon offset forest died. The company said that buying alternative high quality carbon credits on the market had got too expensive.

🛢️ BOTTOM OF THE BARREL

The course of world history tips one way or another on millimeters and blind luck. Crazy.

This is the ballot for Venezuela’s presidential election on July 28th. The observant among you will notice that President Maduro features no less than 13 times.

His face is representing each party that’s in a coalition supporting him, and is standard practice apparently.

No prizes for guessing how this election will pan out…

👋 BEFORE YOU GO

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

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