Military Maneuvers
- The Ukrainian Foreign Ministry, via the country’s official news agency, is demanding that Russian forces stop the shelling of the Zaporizhzhia Nuclear Power Plant, reporting that fire has broken out and an explosion here would be 10X worse than Chernobyl. While a nuclear threat was declared earlier on Thursday, overnight, officials reported that the fire had been extinguished.
- NATO says that Russian troops are shifting tactics to direct attacks on Ukrainian cities as attempts to encircle Kyiv, for instance, have largely failed.
- The strategic port city of Kherson has apparently fallen to the Russians, though it is arguable as to whether they have full control. They have set up checkpoints throughout the city and seized the TV tower late on Thursday, after sending their first armored columns from Crimea into Kherson.
- Russia is attempting to take another strategic port town, Mariupol, but the Ukrainians are still resisting and still holding the town, though it is under siege and the Russians are attempting to starve it out, with no food, water, or electricity.
- Ukrainian forces claim to have liberated Bucha, a town in the Kyiv region.
- The White House is requesting $10 billion in aid (lethal and humanitarian) for Ukraine.
- Ukraine has reported Russian shelling of the Zaporizhzhia nuclear power plant–Europe’s largest–and Russia now has seized the plant. The shelling has resulted in…
Military Maneuvers
- The Ukrainian Foreign Ministry, via the country’s official news agency, is demanding that Russian forces stop the shelling of the Zaporizhzhia Nuclear Power Plant, reporting that fire has broken out and an explosion here would be 10X worse than Chernobyl. While a nuclear threat was declared earlier on Thursday, overnight, officials reported that the fire had been extinguished.
- NATO says that Russian troops are shifting tactics to direct attacks on Ukrainian cities as attempts to encircle Kyiv, for instance, have largely failed.
- The strategic port city of Kherson has apparently fallen to the Russians, though it is arguable as to whether they have full control. They have set up checkpoints throughout the city and seized the TV tower late on Thursday, after sending their first armored columns from Crimea into Kherson.
- Russia is attempting to take another strategic port town, Mariupol, but the Ukrainians are still resisting and still holding the town, though it is under siege and the Russians are attempting to starve it out, with no food, water, or electricity.
- Ukrainian forces claim to have liberated Bucha, a town in the Kyiv region.
- The White House is requesting $10 billion in aid (lethal and humanitarian) for Ukraine.
- Ukraine has reported Russian shelling of the Zaporizhzhia nuclear power plant–Europe’s largest–and Russia now has seized the plant. The shelling has resulted in a massive fire at the training building at the Zaporizhzhia compound, which has since been put out. No radiation leaks have been reported.
Sanctions, Exits, Fallout
- On Thursday, Biden imposed new sanctions on 50 Russian oligarchs and their families. They are now banned from the US financial system and from traveling to the U.S. That list includes Kremlin press secretary Dmitry Peskov, whose daughter has been hitting up Instagram in support of Ukraine. (The socialite daughters of these oligarchs have become Instagram sensations for dangerously criticizing Putin - from afar).
- Oil prices surged to $120 on Thursday before falling slightly to around $111 for WTI and $113 for Brent.
- Fitch and Moody’s have slashed Russia’s sovereign debt to “junk” status, while JP Morgan says the Russian economy will sink 35%. Big businesses are halting operations in Russia. So far that list includes IKEA, Volvo, GM, Ford, BMW, Dell, Apple, DirecTV, TJX, Harley Davidson, Adidas, Nike, H&M, Canada Goose, Boeing, GE, Expedia, UPS, Fedex, Maersk, Walt Disney, Warner Bros, Sony, Paramount, Universal, Spotify, Equinor, Exxon, BP, Shell.
- Nord Stream 2 AG, the company behind Nord Stream 2, has filed for bankruptcy and has terminated contracts with all of its employees, after being sanctioned by the United States last week.
- Oil traders are also shunning Russian oil as insurance, tanker, ethics, and public perception issues override the deep Urals discount.
- Oil majors are treating Russia’s oil industry as a pariah:
- BP is exiting its 19.5% stake in Rosneft
- Shell is exiting its massive Sakhalin LNG project as well as untangling itself from Nord Stream 2 and Gazprom.
- ExxonMobil will exit its Sakhalin-1 project
- ENI will sell its part of the Blue Stream gas pipeline that would carry gas from Russia to Turkey; ENI has a 50% stake in the project and is the operator.
- Italy has also put its loan on hold that was financing a part of the $21-billion Arctic LNG 2 project owned and led by Novatek.
- Centrica has announced the end of its partnership with Gazprom, which supplies gas for Centrica to sell to customers in the UK.
- TotalEnergies has merely said it would not invest any additional funds.
- The flurry of foreign energy companies exiting Russia has drawn the wrath of Moscow, which will now seek to punish those heading for the door. Foreign countries in nations sanctioning Russia will only be allowed to continue business in the country if they provide full support and supplies to their Russian subsidiaries. Investors will be allowed to transfer their holdings to Russian business leaders, with the possibility of taking back their holdings after sanctions have been lifted. International investors that just up and leave will face fines, along with criminal prosecution for top managers or shareholders - the move would be seen as “deliberate bankruptcy”.
- Even though oil and gas shipments are exempt from the UK’s ban on shipments from Russia, a tanker filled with Russian LNG canceled its scheduled arrival at a UK terminal. At least seven other tankers carrying Russian LNG that are in the northwest Europe area are waiting for destination orders by the vessel operators, highlighting the glaring uncertainty that the sanctions and Russian invasion have created in the market.
- As of Friday morning, Ukraine is stopping all exports of natural gas to ensure enough supply for local usage.
- Pakistan’s PM is bucking this trend and has signed a gas deal with Russia–the first to sign a new trade deal with Russia since the invasion of Ukraine.
- Canada has unveiled sanctions against 10 individuals from Russian energy giants Gazprom and Rosneft.
- Poland’s largest oil and gas company, PKN Orlen, has ordered five additional tankers of crude oil from Saudi Aramco to feed its refineries in Poland, the Czech Republic, and Lithuania - to protect against a possible supply disruption of crude oil from Russia. Orlen currently gets half of its crude oil from Russia. The remaining half comes from Saudi Arabia, the US, and West Africa.
- Germany is pursuing with renewed vigor its first LNG shipping terminals as a means of reducing its reliance on Russian gas. One of the future LNG terminals at the port of Brunsbuttel was first conceptualized in 2018. Now that environmental concerns have taken a backseat to Russia’s invasion of Ukraine and potential to choke off Europe from natural gas, the project has now moved to the forefront of Germany’s concerns. Germany may also expedite the construction of an LNG terminal at Wilhelmshaven. Talks with the government about Brunsbuttel are now in the final stage, with construction set to begin before the end of this year. The terminal will also be capable of receiving green hydrogen as well.
Libya Updates
The standoff in Libya intensified this week, with the swearing-in of a new parliament while the incumbent prime minister refuses to step down, essentially creating two parallel governments for a potential return to the exact form of civil war that Libya just recently emerged from. This is putting the National Oil Company in a tricky position (which it is used to by now). With oil being the key factor for anyone looking to lead Libya, the NOC is the gatekeeper and it is impossible for it to remove itself from the political fray. This week, there seemed to be a battle going on among various forces using the NOC as the frontline and fake news as the weapon of choice, leaving readers to wonder if ports were actually closed due to bad weather and the inability of vessels to dock for loading, or whether this was a move intended to apply pressure. It also remains unclear what the situation is at Sharara, the largest oilfield, where Reuters reported a “pause” due to a valve shut-off, and Bloomberg reported “a halt to production”. No Libya media outlets have mentioned anything and Western media appears to be getting its information from a couple of engineers, without confirming it. Neither has the NOC offered any clue to that mystery. The Oil Ministry, the NOC’s new enemy, has thrown its support behind the new prime minister from the east, Bashagha. Thus, shutting down some oil exports due to “bad weather” could upset the new PM’s first days in a contested office. Incidentally, the Russians have also backed Bashagha.
Iran Update
While the nuclear talks with Iran appear to be nearing their end, with no deal as of Thursday night, a major hurdle is a UN report showing Iran is close to having enough enriched uranium for one nuclear bomb. Earlier on Thursday, oil prices slid a bit from their major highs on sentiment that the US could be close to a deal with Iran, and projections that Iran could hit full capacity production within two months after that, easing supply concerns caused by the Russian invasion of Ukraine.
Deals & Discoveries
After many years, South Sudan has finally paid Sudan the full amount of the $3.028 billion in debts it owed to Sudan over oil transit. Land-locked South Sudan relies on Sudan to move its crude oil to the Red Sea via pipeline. South Sudan said it would no longer be giving Sudan 28,000 bpd of crude oil to offset what it owed.
Regulation
- The IEA Ministerial Meeting has resulted in an agreement by its members to release 60 million barrels of crude oil from various strategic petroleum reserves in a coordinated release. The agreement, meant to relieve the price shock of crude oil and ostensibly fill a supply shortfall should there be one, comes as the world slapped sanctions on Russia that are expected to diminish its ability to export crude oil, although direct sanctions on Russia’s energy industry have not yet been employed. The 60 million bpd is less than a day’s worth of global crude oil demand and 9-10 days of Russia’s crude oil exports.
- 25 states, led by Lousiana AG Jeff Landry, are joining forces to oppose a ban on nat gas transport by rail–a move that the groups claim would raise energy costs and threaten national security. The rule was proposed back in November and would suspend the authorization to move LNG by rail–an authorization that has only been in effect since August 2020. The rule was implemented citing concerns with greenhouse gasses, worker safety, and environmental risks.
Renewables
- Arm Wind LLP, a subsidiary of ENI, has inaugurated the second wind farm in Kazakhstan–the Badamsha 2 Wind Farm. The wind farm was awarded to Eni in an auction last September. Combined, the two wind projects–Badamsha 1 and Badamsha 2–have an installed capacity of 144 MW.
- In a bid to grow its renewable fuels segment, Chevron has agreed to acquire Renewable Energy Group valued at $3.15 billion. Renewable Energy Group produces about 2 billion liters of bio-based diesel annually. The purchase, and Chevron’s plan to expand REG’s Louisiana facility, should bring Chevron halfway to its goal of manufacturing 100,000 bpd of biofuel by 2030.
