Politics, Geopolitics & Conflict
Following the devastating earthquake in Turkey, Erdogan has been rumored to be considering postponing May 14 elections until June, though Turkish media sources said on Thursday that the election would go forward in May as planned before the tragedy. Some 47,000 people have been killed so far. While any critical Turkish journalism on the earthquake and rescue efforts has been stifled by the authorities, indications from sources on the ground are that anger remains at a boiling point. This week, Erdogan also continued his unorthodox monetary policy by convincing the Central Bank to once again slash interest rates despite soaring inflation. Contrary to popular monetary thinking, which holds that raising interest rates reduces inflation, Erdogan pursues a policy to the contrary. Record high inflation would suggest he may be wrong. Keep an eye on developments in the run-up to May 14.
Mexico’s AMLO has officially nationalized the first portion of the country’s lithium reserves, with the stated intention of protecting the natural resource from foreign exploitation, specifically naming Russia, China, and the United States. The decree covers some 235,000 hectares in Sonora, which is estimated to contain some 243 billion tons of lithium. If true, that would make it the largest deposit in the world. However, this is not the same type of lithium source as in the “Lithium Triangle” (Argentina, Bolivia, Chile) where…
Politics, Geopolitics & Conflict
Following the devastating earthquake in Turkey, Erdogan has been rumored to be considering postponing May 14 elections until June, though Turkish media sources said on Thursday that the election would go forward in May as planned before the tragedy. Some 47,000 people have been killed so far. While any critical Turkish journalism on the earthquake and rescue efforts has been stifled by the authorities, indications from sources on the ground are that anger remains at a boiling point. This week, Erdogan also continued his unorthodox monetary policy by convincing the Central Bank to once again slash interest rates despite soaring inflation. Contrary to popular monetary thinking, which holds that raising interest rates reduces inflation, Erdogan pursues a policy to the contrary. Record high inflation would suggest he may be wrong. Keep an eye on developments in the run-up to May 14.
Mexico’s AMLO has officially nationalized the first portion of the country’s lithium reserves, with the stated intention of protecting the natural resource from foreign exploitation, specifically naming Russia, China, and the United States. The decree covers some 235,000 hectares in Sonora, which is estimated to contain some 243 billion tons of lithium. If true, that would make it the largest deposit in the world. However, this is not the same type of lithium source as in the “Lithium Triangle” (Argentina, Bolivia, Chile) where it is sourced from rock and brine. Mexico’s lithium is sourced in clay (like the sedimentary clay in Nevada).
Fears are mounting that Moscow is setting the stage for a move on Moldova, with the Russian Defense Ministry accusing Ukraine of planning to invade Moldova’s breakaway region of Transnistria, which borders Ukraine and which houses Russian troops. The accusations follow Moldova’s seating of a new prime minister who is pro-Western and intends to pursue EU membership. At the same time, in a series of anti-Western moves, Putin revoked a key decree dating back to 2012 (when Moscow and Brussels were … friendly) that essentially supports Moldova’s sovereignty in terms of what happens to Transnistria.
Markets
ADNOC Gas’s last-minute $2 billion IPO was a hit, with investors taking all of the shares within hours of opening on Thursday. Cornerstone investors include Apha Dhabi and International Holding Co. It’s the biggest IPO of the year so far in Europe, the Middle East, and Africa.
Russia’s crude oil exports to China in January hit the highest level since Russia’s invasion of Ukraine. Russia’s oil is now cheaper for China than African crude grades that it is accustomed to purchasing, further cementing the trade-flow changes triggered by Western sanctions as punishment to Moscow for the invasion.
Ukraine Naftogaz CEO Oleksiy Chernyshov has announced a goal of not importing natural gas this year, by raising Naftogaz’s gas output by 8%, and private companies raising theirs by 16%.
Germany is looking to increase its LNG import capacity to 70.7 million tons per year by 2030, catapulting the country into the role of the world’s fourth-largest LNG import capacity holder, and further solidifying what is looking like a permanent shift away from Russian gas.
Deals, Mergers & Acquisitions
China’s state-backed fund CNIC Corp purchased a nearly 5% minority stake in Mercuria in Q4 last year, but the deal has just now been made public. As of 2021, Mercuria had an equity value of $4.4 billion. Interestingly enough, China’s refining and petrochem company ChemChina sold its 12% stake in Mercuria back to Mercuria in Q3 2022.
A Singapore-based oil trader, Wellbred Trading DMCC, has plans to build a refinery in Saudi Arabia that will take waste chemicals and turn them into gasoline components and blending fuels. Wellbred currently gets the waste chemicals from Rabigh Refining & Petrochemical Company, which it then trucks to a refinery in the UAE for processing. The new facility in Saudi Arabia is near the Rabigh complex, so the waste chemicals will be diverted there instead.
Qatar Energy is taking over LNG marketing from Qatargas to consolidate the marketing of all of its energy productions. The only products QE doesn’t market for Qatargas currently are LNG and helium.
Discovery & Development
OPEC member Equatorial Guinea has awarded PSCs for 3 new offshore blocks, as it attempts to boost production that was just 60 kbpd in January - or about half of its quota. The first PSC, for block EG-01, went to Panoro and its partners Kosmos Energy, and state-run GEPetrol. The second blocks, EG-18 and EG-31, went to Africa Oil with an 80% stake. The remaining stake will be held by GEPetrol.
UAE’s Crescent Petroleum will develop the Gilabat-Qumar and Khashim Ahmer-Injana gas fields in Diyala Province in Iraq, initially capable of producing 250 MMscfd. A 3rd Khider Al-Mai exploration block in Basra is also scheduled to be developed. First gas from Diyala is expected within 18 months. For Iraq, this means more energy independence from Iran.
The U.S. Department of the Interior has proposed its first offshore wind auction in the GoM as part of President Biden’s plan to develop the wind industry offshore along the entire coastline of the U.S, issuing a proposed sale notice for 102,480 acres off Lake Charles, Louisiana and 179,266 acres near Galveston. The DoI said that the proposed sites could potentially power nearly 1.3 million homes.
