28th August 2024

Good morning team - this is Both Barrels. Your daily dose of all things oil, gas, and energy, without the hot air. Here’s what hit the wires today:

• 😵‍💫 “I don’t understand the West”

• 💸 Exxon’s Permian divestments

• 💯 100 mb/d in 2050

• 🎉 It’s all about Lea County

• ➕ plus Libya locking down; twilight at North West Shelf; Petronas suing South Sudan; the risk to European energy players; new Iran deal off the table.

Let’s take a look.

📈 THE NUMBERS

Libyan oil could be headed to zero, tankers are getting blown up in the Red Sea, and the Middle East is a whisker away from war, yet oil prices are languishing. Strange times in oil markets.

🗞️ WELL-HEADLINES

 🗽 North America

• Exxon shedding non-core in the Permian - as it digests its Pioneer buy, the US major is targeting the sale of 14 conventional asset groups in the Permian, which it’s hoping will fetch ~$1 billion.

• Lea County fueling Permian growth - parts of the Delaware basin in southeast New Mexico are becoming the most sought-after drilling locations in the Permian. The heavily stacked plays in Lea and Eddy county contributed ~29% of all crude oil production in the Permian Basin in 2023. Chevron and other producers have said they see more upside in the Permian this year. The US shale phenomenon charges on.

• Shutdowns at Zydeco pipeline - parts of Shell’s 375 kb/d, 350 mile pipeline will be shut for three to four days starting September 24th for maintenance.

🏰 Europe

• Harbour ahead of schedule - the UK indy expects to close its $11.2bn acquisition of Wintershall Dea in September this year, vs a previous forecast of Q4.

⛩️ Asia & Oceania

• Twilight at North West Shelf - Woodside has announced plans to close one of the five trains at its 16.9 mtpa LNG project in Australia due to declining feed gas. To be fair, the project has been going for over 40 years. Good shift.

🦁 Africa

• Libya shutdown underway - production at several Libyan oilfields has been shut amid a standoff between the country’s two rival governments about the leadership of the Central Bank. The government in the east, where most of the oilfields are located, has threatened to shut down all 1.2 mmb/d of the country’s output. Sadly for Libya, political disruption to its oil sector has been par for the course for over a decade now.

• Petronas taking South Sudan to court - earlier in August, South Sudan blocked Petronas’ $1.25bn sale of its assets and seized them for themselves. Understandably, Petronas isn’t too happy about that and is now suing South Sudan in international courts.

• Africa Oil increases its stake in Impact - the company exercised a call option to purchase an additional 7% interest in Impact which has stakes in the exiting Orange Basin in Namibia.

🗿 Central & South America

• Shake up at PDVSA - Maduro is replacing the head of Venezuela’s NOC with its current vice president, Hector Obregon. Fixing that mess must be one of the toughest jobs on the planet. Buena suerte.

🌍 GEOPOLITICS & MACRO

• 100 mmb/d in 2050 - Exxon’s latest long term energy forecast sees oil demand at similar levels in 25 years as it is today. Reduced demand from vehicles will be offset by increased demand in industry. The company also sees hydrocarbons providing a constant share of the global energy mix and warned of a risk of more energy shocks if the industry didn’t keep investing. Hear, hear.

• “I don’t understand the West” - me neither Patrick, me neither. Total’s CEO has criticized western countries for their refusal to fund gas projects in Africa, highlighting that LPG is the best way to reduce the use of dirty and laborious firewood, charcoal and animal waste for cooking and heating in Africa. In Africa over 650 million people (80% of people) rely on primary biomass for cooking and ideological organisations like the IEA want to deny them far superior alternatives.

• New Iran nuclear deal off the table - reviving the 2015 nuclear accord, which Trump withdrew from in 2018, ain’t gonna happen, according to the US State Department. “The United States will ensure one way or another that Iran will never have a nuclear weapon, and we are prepared to use all elements of national power to ensure that outcome,” a spokesperson said. Gulp.

• Energy players could “lose everything” - a NATO official warned European energy players that they are “under threat in ways that you were not 15 years ago” due to growing hostility with Russia. Energy infrastructure is always a primary target in war…

• Goldman’s reduces Brent range to $70-$85/bbl - oil forecasts aren’t worth the paper they;re written on but changes to them are a useful barometer of market sentiment. GS cited strong US production and OPEC+ spare capacity as the reason for its $5/bbl reduction.

• The $5 trillion global commodity market - ever wondered just how big the global oil & gas market is? Wonder no more:

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Tech, geothermal, and data - Meta has signed a deal to buy geothermal power from 2027 to supply its booming data centers in the US. While it still faces some technological challenges, geothermal makes a lot of sense: it’s genuinely renewable (i.e. uses limited natural resources) and baseload (doesn’t rely on the weather). It also involves drilling very deep holes, something the oil & gas industry knows a thing or two about.

• Norway’s oil fund commits $1bn to renewable fund - the filthy rich sovereign wealth fund is making the investment into Copenhagen Infrastructure Partners flagship fund CI V, which invests in wind, solar, grid and distribution, and storage.

• Canada slaps 100% tariff on Chinese EVs - do they want cheap EVs or not? So much for globalization, competition, and free trade.

• Equinor commissions world's first ammonia - powered supply vessel - the boat will be in action by 2026 to supply Equinor’s O&G installations on the NCS.

🛢️ BOTTOM OF THE BARREL

Old but gold. I pity those with such hysterical doomism. This sort of thing should be classified as a mental condition.

A reminder that there has never been a better time to be alive for almost everyone on earth. Thanks to hydrocarbons and the abundant energy they provide.

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

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