4th October 2024

Lets top and tail this week, shall we. Here’s your daily dose of all things oil, gas, and energy:

• 💥 Brent rips 4%…would Israel really do it?

• 🌍 Africa’s Energy Bank

• 🛑 Net-zero’s insurmountable bottleneck

• 🇨🇭 Swiss sense of humour 

• ➕ plus Colombia hits the gas jackpot; Total plans continued growth; Summit buys Tall Oak; Houthi email threats; Kashagan’s shutdown; AkerBP’s North Sea discovery; Shell building Rome; and barrels more.

Have a great weekend. See you Monday.

📈 THE NUMBERS

Oil prices popped 4% today, and are up 9% on the week, after the possibility of Israel attacking Iranian oil facilities looms larger.

It’s not just a potential hit on Iranian flows that worries the market, it’s everything that could come after that…

Pandora’s box would be flung wide open.

🗞️ WELL-HEADLINES

 🗽 North America

• Summit Midstream bags Tall Oak for $450m - Tall Oak owns gas gathering and processing systems in the Arkoma basin in Oklahoma, including two 220 mmcf/d natural gas processing plants and about ~ 400 miles of natural gas gathering lines.

• Shell building Rome - the major has FID’d a new GoM offshore pipeline, named Rome, that will connect Shell’s Green Canyon Block 19 to the Fourchon Junction facility on the Louisiana Gulf Coast.

• Fatality at Woodside ammonia facility - details are scarce but a worker died during an incident at the Beaumont clean ammonia site in Texas.

• A flurry of deal completions - Tourmaline completes $1bn Crew Energy buy; TC Energy completes spinoff of its liquids pipelines business into South Bow Corporation; Honeywell finalizes $1.8bn purchase of Air Products’ LNG process technology. Mach closes two Midcontinent deals. The M&A bankers will be celebrating hard this weekend.

• Crude inventories up - US oil stocks rose last week 3.9 mmbbls as refineries reduce throughput as they head into post-summer maintenance season. Gasoline stocks rose by 1.1 mmbbls.

• Murphy’s new man in charge - Eric Hambly will take the top job when Roger Jenkins retires at the end of the year.

🏰 Europe

• AkerBP and Harbour on the mark at Storjo - a successful exploration well in the Norwegian North Sea has found 13-55 mmboe of recoverable reserves at the Storjo prospect, near the Skarv area.

• Russian nationalization rumours - the Kremlin has basically non-commented on reports that Russia’s energy minister has proposed nationalizing the country’s oil and gas sector. This rumour has been flying around for ages, to be fair.

• Total is cracking on - the major announced plans to keep growing its oil & gas output by 3% a year to 2030, highlighting the continued need for more investment. Total also announced some juicy share buybacks and dividends, and lamented the poor O&G investment climate in the UK.

🕌 The Middle East

• Aramco completes $3bn bond raise - the raise was 6x oversubscribed and is priced at ~4.5%. Back in July, Aramco also raised $6 billion from its first bond issuance in three years.

• Chevron restarts Israel gas fields - the Tamar and Leviathan gas fields in the East Med were briefly shut down in the wake of the attack on Israel by Iran, but both are now back up and running.

⛩️ Asia & Oceania

• Kashagan set for 38 day shut down - the 400 kb/d oilfield in Kazakhstan, one of the world’s largest, will be offline for some major repair and maintenance works starting next week.

🦁 Africa

• Africa’s $5bn energy bank - oil-producing nations in Africa have raised 45% of the initial $5-billion seed capital for the planned Africa Energy Bank, which is for funding oil projects as self-righteous international banks refuse to for “ESG” reasons. If you ask me, it’s shockingly immoral for western financial institutions in their air-conned skyscrapers built with hydrocarbons to refuse to enable Africa to develop in the same way. The environmental movement is fundamentally anti-human.

• Angola & Congo partnering up on dormant project - the countries have reached an agreement to revive a 20-year old offshore development in Block 14.

🗿 Central & South America

• Colombia hits the gas jackpot - Ecopetrol and Petrobras have announced two major offshore gas discoveries that could produce up to 800 mmcf/d and meet 80% of Colombia’s gas demand. The find couldn’t have come soon enough as Colombia grapples with a gas shortage, and so it will be racing to develop this discovery asap.

🌍 GEOPOLITICS & MACRO

• Would Israel really go after Iran’s oil infra? - many hardliners in Israel are calling for exactly that after Iran’s missile barrage earlier in the week and President Biden let it slip that it was being discussed, sending oil prices up by 4% immediately.

  • It would be a HUGE escalation if Israel goes down that route, and I’m not convinced the US would actually be supportive given the carnage that would ensue in oil markets ahead of the US election (it’s hard to trust much of what Biden says these days).

  • Meanwhile, Hezbollah released a statement saying “If the energy war starts, the world will lose 12 mmb/d of oil. Either everyone enjoys the oil or everyone is deprived.”

  • One thing is for sure, Israel is getting bolder, and the likelihood of such an attack is as high as I can remember. Buckle up. All bets on oil prices are off if that happens.

• Houthis send threats, via email - imagine opening up your inbox and finding an email from the Houthis telling you they’re going blow up your ships. Well that’s exactly what happened to a bunch of shipping bosses.

• OPEC refutes WSJ $50/bbl nonsense - the US newspaper wrote a piece saying that Saudi warned other OPEC members that oil prices would plummet if the group’s members didn’t stick to output cut targets. OPEC has since said the meeting in which that supposedly happened never occurred. Hmmm. Mainstream media doing everything it can to reduce oil prices pre-election, perhaps…?

• No changes to OPEC policy - the latest joint ministerial monitoring committee meeting (JMMC) was a formality with the group making no changes to production policy.

💨 CARBON, CLIMATE, & OTHER ENERGY STUFF

• Net-zero needs to $2.1 trillion for mining - a new Bloomberg report has estimated this is the eye-watering amount of investment needed by 2050 into mining to reach net-zero. The “renewable” industry is built off the back of mining, which is neither clean nor renewable, nor has the capability to ramp up even close to required levels. The mining bottleneck means net zero is dead in the water.

• Toyota delays US EV production - following in the tracks of Volvo and Ford, Toyota has become the latest car manufacture to reign in EV plans due to slowing sales. The Japanese giant had planned to start producing EVs in the US in 2025 or early 2026 but has now pushed this back to an unspecified time in 2026.

• UK announces £22bn in CCS funding - the government has recently been complaining about a ~£20bn black hole in its finances and cut the winter fuel allowance for pensioners to save the treasury money. Yet it has somehow found all this cash to subsidize CCS projects in the UK…

• Origin bails on Aussie hydrogen project - The Hunter Valley Hydrogen Hub had hoped to decarbonise industries in New South Wales but project leader Origin has given up on it, citing “uncertainty around the pace and timing of development of the hydrogen market, and the risks associated with developing capital-intensive projects of this nature”.

🛢️ BOTTOM OF THE BARREL

Iran’s Kharg Island processes almost all of Iran’s oil exports and is a sitting duck off Iran’s west coast. Got to be high in Israel’s hit list…

It takes about 18 years to bring online a new copper mine…

👋 BEFORE YOU GO

Any feedback, requests, terrible jokes? Please just ping a reply to this email and let rip. We read every word. 

Oh and if you could share us with your pals who might like a drop of us, then we’d be very happy.

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

Was this forwarded to you? Both Barrels is a concise and irreverent oil, gas, and energy briefing, delivered to you daily. It’s free to subscribe.