Geopolitics, Politics & Conflict
Turkey is one of the biggest natural gas importers in Europe and now finds itself in a difficult position where it has to buy more gas at skyrocketing spot market prices to get through the winter as contracts expire. Making matters worse, the lira is in a free-fall thanks to Erdogan’s latest move against the Central Bank, signifying that the bank is definitely not independent. This week, Erdogan fired three of the bank’s monetary policy committee members and replaced them with his own stooges. He’s also fired three central bank governors in less than three years. This latest move has sent the lira spiraling to a record low.
At a summit this week, European Union leaders pledged more support (vaguely) to Ukraine, the victim of Moscow’s gas politics, which has succeeded in bypassing Ukraine with gas and depriving it of much-needed transit revenues. Ukraine is not likely feeling any more at ease over what is largely an empty gesture at this point.
The fourth and fifth days of protests following a march through D.C. culminated in dozens of protesters staging a sit-in at the Department of the Interior, demanding that Biden halt approval for fossil fuels projects. Outside the venue, other demonstrators who did not make it into the building attempted to push past police, prompting police to use tasers. One police officer was reportedly sent for medical treatment as a result of the altercation. Indigenous…
Geopolitics, Politics & Conflict
Turkey is one of the biggest natural gas importers in Europe and now finds itself in a difficult position where it has to buy more gas at skyrocketing spot market prices to get through the winter as contracts expire. Making matters worse, the lira is in a free-fall thanks to Erdogan’s latest move against the Central Bank, signifying that the bank is definitely not independent. This week, Erdogan fired three of the bank’s monetary policy committee members and replaced them with his own stooges. He’s also fired three central bank governors in less than three years. This latest move has sent the lira spiraling to a record low.
At a summit this week, European Union leaders pledged more support (vaguely) to Ukraine, the victim of Moscow’s gas politics, which has succeeded in bypassing Ukraine with gas and depriving it of much-needed transit revenues. Ukraine is not likely feeling any more at ease over what is largely an empty gesture at this point.
The fourth and fifth days of protests following a march through D.C. culminated in dozens of protesters staging a sit-in at the Department of the Interior, demanding that Biden halt approval for fossil fuels projects. Outside the venue, other demonstrators who did not make it into the building attempted to push past police, prompting police to use tasers. One police officer was reportedly sent for medical treatment as a result of the altercation. Indigenous members of the protest group are demanding the abolishment of the Bureau of Indian Affairs and the restoration of native land.
Oil Markets
Oil supply is set to remain tight for the foreseeable future, with some OPEC countries unable to meet their quotas under the cartel’s gradual increase.
API data on Wednesday showed a 5.2-million-barrel increase in U.S. crude stockpiles for the week ended Oct. 8, but a 4.6-million-barrel decrease in gasoline inventories and a 2.7-million-barrel decrease in distillate stocks. That larger-than-expected drop in gas inventories led to fresh buying.
The EIA a day later reported a 6.1-million-barrel weekly rise in US crude inventories, while crude stocks at Cushing declined by 1.9 million barrels.
OPEC trimmed its 2021 demand forecast but kept its 2022 forecast unchanged.
Giant energy trader Gunvor has reduced its LNG position after $1 billion in margin calls prompted by skyrocketing prices.
US oil and gas merger and acquisition activity for Q3 was at $18.5 billion, which represents a 44% drop in activity from Q2.
Deals, Mergers & Acquisitions
Angola’s state-run Sonangol saw dismal results from its recent farm-out attempt for 8 blocks, with only small local players for the most part showing any bidding interest. OPEC-member Angola is suffering from underinvestment in its oil and gas sector and is having trouble reaching its OPEC quota. Last year, Sonangol - Angola’s main economic engine - lost over $4 billion in the pandemic. It’s not likely to be able to meet its OPEC quotas for a year.
Suriname’s state oil company Staatsolie has signed a 30-year PSC with Chevron for shallow-water Block 5 offshore (after a string of discoveries by Total Energies and Apache in Suriname’s deepwater portion of the Guyana-Suriname basin). The PSC is with Chevron Exploration Suriname Ltd and a consortium by TotalEnergies and Qatar Petroleum (QATPE.UL).
ENN Group out of China has signed a 13-year deal to buy 900,000 tonnes LNG per year from American Cheniere Energy beginning in July 2022. from the United States. Prices are based on the Henry Hub futures index.
As Saudi Arabia looks to earn a minimum of $17 billion by selling a minority stake in its gas pipelines, the oil giant is trying to make it easier for potential buyers by setting the stage for banks to pre-arrange loans potentially up to $14 billion that Aramco could then offer buyers for a more attractive deal, according to Reuters sources.
Good news for one of the market’s favorite (but most volatile) hydrogen stocks, Plug Power. This week, PlugPower announced it would be partnering with Airbus and Phillips 66 to find ways to power aircraft and industry with hydrogen. The partnership deal boosted PlugPower stocks by 13% on Wednesday.
Energy storage has, for the first time, made it onto the NYSE with the merger of ESS energy storage systems with SPAC company ACON S2. The new company is trading on the NYSE as GWh and GWh.W.
Discovery & Development
Mexican Pemex has won approval to spud the Chucox exploration well in Tabasco state, where it hopes to recover over 9 million boe at a cost of around $13 million and a timeframe of just over 50 days.
A consortium of companies led by Royal Dutch Shell has been awarded a contract by the US Dept of Energy to prove up a large-scale liquid hydrogen storage tank for import and export terminals. This is an estimated $12-million demonstration project that, if successful, could change the course of hydrogen in the US. NASA is also part of the project.
As many as 7 new offshore lease sales for wind energy could be held by 2025 under the Biden administration’s plans to significantly expand this capacity. The administration this week said it was exploring lease sales on the Atlantic and Pacific coasts, as well as in the Gulf of Main, the New York Bight, and the Gulf of Mexico. In June, a lease sale for the New York Bight was announced.
Further to Arctic oil and gas exploration, the EU is seeking to ban Arctic drilling. Three EU members are members of the Arctic Council: Denmark, Finland, and Sweden. Already, the move is being perceived as another potential victory for Russia, which is hitting the Arctic hard.
Italian Eni will withdraw from its South African oil exploration plans with Sasol offshore due to technical challenges related to drilling in waters up to 3 kilometers deep.
ExxonMobil has announced it will build a 30,000 tonne/year recycling plant for plastic waste in Baytown, Texas, with an anticipated startup date by year-end 2022. The planned capacity would eventually be (within 4 years of launch) 500,000 tonnes of plastic annually.
