2nd October 2024

Today in oil, gas, and energy:

• 💣 Iran goes ballistic

• 💸 Majors' big foreign tax bills

• ⛩️ Rare drilling in Japan

• 🇺🇸 US oil demand up, supply down 

• ➕ plus landmark FID in Suriname; Norway targeting tricky reservoirs; Europe’s inflation is cooling; ADNOC spends big; OPEC’s “noble” job; and barrels more.

Let’s have a look…

📈 THE NUMBERS

Mayhem in the Middle East has pushed oil prices up today as chatter of Israel potentially targeting Iranian oil infrastructure does the rounds.

All bets on oil prices are off if that happens…

🗞️ WELL-HEADLINES

 🗽 North America

• US majors big foreign tax bills - new filings have revealed that Exxon, Chevron, and Conoco paid out a combined $42bn in taxes and royalties to foreign governments in 2023, roughly 8x more than what they paid to the US (excluding state and local taxes).

• US oil demand at five-year high while supply slows - the latest monthly EIA data shows that consumption in July rose 1.2% from June to 20.48 mmb/d, driven by high demand for gasoline and jet fuel. Meanwhile, oil output fell slightly for the second time in three months by 25 kb/d to 13.2 mmb/d.

• EQT cutting 15% of jobs - the company said the cuts were part of an “integration process” following its $14bn acquisition of Equitrans Midstream.

• First cargo shipped from Fast LNG - new Fortress’ floating LNG facility offshore Mexico claims to be the fastest large-scale LNG project ever developed.

• Adding to the SPR - the US government has bought another 6 mmbbls for the heavily depleted SPR, taking the total of recent purchases to 56 mmbbls.

🏰 Europe

• Unlocking Norway’s tight reservoirs - the country’s oil regulator is hoping that new hydraulic fracturing technology can tap into giant resources in the North Sea, including the dormant Victoria discovery that holds an estimated 140 bcm of gas but has been left undeveloped for over 20 years due to the complexity of its development.

• Weaning Greece off Russian gas - the new Alexandroupolis LNG import terminal in Greece, which is seen as a key facility to replace Russian gas in southern Europe, has just started up.

• Delek sells ~$80m of Ithaca shares - Ithaca’s largest shareholder made the sale as part of its pledge to do so following Ithaca’s acquisition of Eni’s UK business earlier in the year.

• CalEnergy plans to drill in the UK - the company is targeting 2 exploration wells in the southern North Sea. Nice to see not everyone is leaving the UK.

🕌 The Middle East

• ADNOC splashes out on Covestro - the NOC is buying the German chemical company for $16.3bn in cash, its largest ever acquisition, as it looks to diversity its business away from oil & gas.

• UAE’s 144 unconventional well campaign - ADNOC is teaming up with SLB to drill dozens of wells within the next year as it aims to tap into the UAE’s unconventional oil & gas resources.

⛩️ Asia & Oceania

• Not giving up on Japanese E&P - Japex is planning new exploratory drilling offshore Japan. Domestic oil activity in resource poor Japan is rare, and the country has just one producing offshore field.

• Malaysia undeterred in the South China Sea - the country has stepped up E&P activity in the disputed but resource rich waters, despite pressure from China which boldly claims 90% of the sea.

• Up your game, Exxon - Indonesia has asked Exxon to increase production by 25 kb/d to boost the governments revenues. “While Exxon is currently targeting 125 kd/b for 2026, I am sure it can top 150 kb/d in 2026 thanks to the management system, work ethic, and creativity of the Exxon team,” the energy minister said. It’s like saying to a kid “I bet you can’t tidy your room in 2 minutes”.

• Total and Santos ink LNG deal - Santos will supply the French major with 0.5 mtpa of LNG over 3 years.

🦁 Africa

• Petrobras bags South Africa stake - it acquired the 10% stake in the offshore Deep Western Orange Basin oil block from Total for an undisclosed sum.

🗿 Central & South America

• Total FIDs Suriname mega project - the GranMorgu (which means “new dawn”) development is expected to cost $10.5bn and is targeting an estimated 750 mmbbls of oil at the offshore Sapakara and Krabdagu discoveries. First oil is due in 2028. A new dawn indeed for Suriname, the oil patch’s emerging hotspot.

🌍 GEOPOLITICS & MACRO

• Iran goes ballistic - Iran has launched over 180 ballistic missiles at Israel in retaliation for the killings of the leaders of its allies Hezbollah and Hamas. Like a similar attack it carried out in April, most of the missiles were intercepted and limited damage was done but, nevertheless, voices across Israel have called for a decisive response. Israel’s hard right PM said that Israel must “now destroy Iran’s nuclear program, its central energy facilities, and to fatally cripple this terrorist regime”. Yikes.

• Israel invades Lebanon - it’s all kicking off…Israel troops entered southern Lebanon to carry out “limited, localised and targeted" raids against Hezbollah”. Meanwhile, Lebanon's PM said that his country was facing "one of the most dangerous phases" in its history and that one million people had been displaced across Lebanon since Israeli air strikes began last month.

• OPEC doing a “noble job” - according to the UAE’s energy minister. “OPEC+ has sacrificed more than others but the critical element is that it is staying together. I would like you to imagine the world without this group. We would be in chaos,", he said.

• Europe’s inflation is easing - inflation in the Eurozone fell below its 2% target for the first time since mid-2021, much to the relief of central bankers and savers. Falling energy prices were the largest contribution to the decline. Your regular reminder that energy is the input cost to everything.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Japan sticking nuclear and renewables - despite being vocally opposed to nuclear in the run up to Japan’s election, the new PM will continue with the strategy of restarting Japan’s nuclear power plants and pushing ahead with renewables.

• Hydrogen investments still lagging - an IEA report has found the project pipeline for new hydrogen investments is stalling due to unclear demand signals, financing hurdles, incentive delays, regulatory uncertainties. Will hydrogen be one of those technologies that’s always on the horizon?

🛢️ BOTTOM OF THE BARREL

This is the official Iranian military Twitter account…

Terrifyingly lighthearted commentary to launching over a hundred missiles at crowded cities.

Speaking of terrifying. The financial incinerator that is offshore wind:

👋 BEFORE YOU GO

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

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