27th September 2024

Happy Friday girls and boys. Here’s all you need to know today in the industry that underpins it all:

• 😵‍💫 Saudi price target: much ado about nothing

• 🚂 The end of an era

• 🇱🇾 Stalemate broken in Libya

• 🌀 Helene’s hammering

• ➕ plus Petrobras looks across the Atlantic; oil inventories plunge, prices shrug; Chinese nuclear sub sinks; Northern Lights ready for action; meet Expand Energy; John Hess sacrificed; Exxon’s Nigeria spending spree; Shell wins out in Trinidad…

Have a good one.

📈 THE NUMBERS

Just when you thought the market was taking a breather, oil prices sink again, with WTI down ~4% over the past couple of days as speculators fret over baseless Saudi rumours.

🗞️ WELL-HEADLINES

 🗽 North America

• Helene hits 25% of GoM output -~440 kb/d of crude production in the GoM is offline as producers battened down the hatches for Hurricane Helene. The Cat 4 hurricane is hitting Florida’s Big Bend area hard. Hang on in there, Florida friends.

• Meet Expand Energy - this is the fairly unimaginative name of the new combined Chesapeake and Southwestern company. The $7.4bn merger will create the largest gas producer in the US and is expected to be completed in the first week of October.

• John Hess sacrificed for merger - the FTC approved the Chevron / Hess merger only on the condition that Hess CEO John Hess is barred from becoming a board member of the company. No reasons have been cited but the agency made a similar demand when it approved Exxon’s acquisition of Pioneer earlier this year. I’m sure John, who recently join Goldman Sachs’ board, will be just fine.

• Validus bags Citizen Energy for $2bn - Citizen, backed by PE firm Warburg Pincus, is one of the largest E&P’s in the Mid-Continent basin, which predominantly covers Oklahoma, and parts of Kansas, Texas, and Arkansas.

• Crude stockpiles hit 2.5 year low - a larger-than-expected decline in US oil stocks of 4.5 mmbbls has inventories at their lowest levels since April 2022. There’s an interesting disconnect between spot markets, which are clearly tight, and the near/mid term futures market which most feel are oversupplied.

• Total in Eagle Ford buy - in a move to bolster supply for its US LNG exports, Total has acquired a 45% stake in gas producing assets in the Eagle Ford from Lewis Energy Group. The value was kept under wraps.

🏰 Europe

• Northern Lights CCS ready for business - construction is complete at the world’s first commercial CO2 transportation and storage project in Norway which, in 2025, will start receiving cargoes of CO2 for injection into a reservoir 2,600 m below the seabed.

• More woes for Arctic LNG - Russia’s flagship LNG project was dealt another blow today when a Chinese yard cancelled a contract for key modules in the third train due to sanctions. Imagine spending $21bn on a new piece of kit and then all your customers and suppliers start disappearing. Ouch.

• Insider selling at Odfjell Drilling - the company’s largest shareholder, Odfjell Partners Holding, says it is still committed to the firm after selling a 10% interest for ~$110m.

🕌 The Middle East

• “Amazed” at cost of Aphrodite development - Energean’s CEO has had a dig at Chevron’s $4bn plan for the field in Cyprus. Mathios Rigas said the plan is a “word-for-word” copy of Energean's Karish project in Israel, but double the cost. Shots fired.

• Petronas expands in the UAE - the Malaysian NOC landed a new onshore exploration concession as it looks to boost its presence in the country.

⛩️ Asia & Oceania

• China fires up Exxon LNG import terminal - Exxon has a 20-year deal for capacity at the new 4 mtpa LNG receiving terminal in Huizhou (no, no idea where that is either, south China apprently), and will use the gas to supply its nearby multi-billion-dollar chemical complex.

🦁 Africa

• Unlocking Libya’s stalemate - Libya’s eastern government has promised to reopen the country’s oilfields after a deal was reached between the two rival governments over who should be in charge of the central bank. The blockade has knocked off ~750 kb/d of production which is expected to ramp back up over the coming two weeks.

• Petrobras looks across the Atlantic - Brazil’s NOC is targeting investments in various projects in West Africa including Galp’s Mopane oil and gas field in Namibia. Given Africa and South America were once connected there are geological similarities between the two offshore regions, which Petrobras hopes will stand it in good stead.

• Exxon’s Nigeria spending spree - the major is planning $10bn of offshore investment, focused on its Owo project, as well as a further $2.5bn per year to boost oil output by 50 kb/d. Many IOCs have exited onshore Nigeria positions due to security problems, but it’s much harder for mischievous bandits to disrupt offshore operations.

🗿 Central & South America

• Prio makes $1.9bn Peregrino purchase - the Brazilian company has acquired the 40% stake from China’s Sinochem in the giant offshore field that produces ~ 110 kb/d of oil.

• Oil barge sinks in Venezuela - two people have died after a PDVSA oil barge sank in Lake Maracaibo in bad weather. These are the sorry consequences of chronic under-investment and bad management at PDVSA, a company which used to be the envy of many before Chavez and socialism destroyed it. Crazy to think that Venezuela has the most oil reserves on earth, they just cant get their act together.

• Shell wins out in Trinidad auction - the company reportedly beat bids from BP, EOG, and others for the coveted shallow water Modified U(c) block in Trinidad and Tobago.

🌍 GEOPOLITICS & MACRO

• Saudi price target: much ado about nothing - an FT article about Saudi “abandoning its $100/bbl price target” in favour of increased output sent corners of the market into a flap. However, most should know that OPEC and Saudi do not have an official price target to abandon. OPEC has since denied the reports but some are suggesting it could have been a deliberate leak by Saudi to pressure non-compliant (and higher cost) OPEC producers like Iraq to get in line and comply with their quotas.

• Chinese nuclear sub sinks - hardly energy related but pretty amusing nevertheless. A brand new state-of-the-art nuclear powered military submarine sank while in port at a Wuhan shipyard. Satellite images show cranes trying to salvage the stricken sub.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• UK says goodbye to coal after 142 years - the birthplace of the industrial revolution, and home of the world’s first coal power station in 1882, is closing its last coal plant this weekend. Coal is dirty and inferior to natural gas but its positive impact on the world and all our standards of living cannot be denied. Truly the end of an era.

🛢️ BOTTOM OF THE BARREL

Wind and solar mean a whole load of new electricity pylons. Not in my back yard, thanks.

👋 BEFORE YOU GO 

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

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