Politics, Geopolitics & Conflict
- PetroChina is allegedly threatening to pull up stakes in the southern Iraqi governorate of Maysan after another round of protests outside the oil company’s headquarters demanding improved services and infrastructure. Police dispersed the protesters, but not before Iraqi media sources claimed that PetroChina had threatened that if protests continued they would withdraw to another governorate or from the country entirely, which would deprive Iraq of 500,000 bpd.
- While Libyan officials have already mentioned their plans to increase oil output to 2 million bpd (from the current 1.2 million bpd), the NOC made the proclamation official this week, with its new chairman promising a “medium-term” plan to make it happen over the next three to five years. This won’t be an immediate boost to the market, and given the rival prime ministers and militia factions simply in a holding pattern as all sides attempt to strengthen their positions, anything can happen in that timeframe.
- Nuclear deal talks with Iran ended in Vienna this week without a resolution but everyone was sent home with a “final draft” agreement that requires green lights all around. Iran said on Friday that the EU’s proposal could be “acceptable”--at least if it gets an assurance “on the issues of safeguards, sanctions and guarantees”. Chiefly, Iran wants assurances that future U.S. Presidents cannot…
Politics, Geopolitics & Conflict
- PetroChina is allegedly threatening to pull up stakes in the southern Iraqi governorate of Maysan after another round of protests outside the oil company’s headquarters demanding improved services and infrastructure. Police dispersed the protesters, but not before Iraqi media sources claimed that PetroChina had threatened that if protests continued they would withdraw to another governorate or from the country entirely, which would deprive Iraq of 500,000 bpd.
- While Libyan officials have already mentioned their plans to increase oil output to 2 million bpd (from the current 1.2 million bpd), the NOC made the proclamation official this week, with its new chairman promising a “medium-term” plan to make it happen over the next three to five years. This won’t be an immediate boost to the market, and given the rival prime ministers and militia factions simply in a holding pattern as all sides attempt to strengthen their positions, anything can happen in that timeframe.
- Nuclear deal talks with Iran ended in Vienna this week without a resolution but everyone was sent home with a “final draft” agreement that requires green lights all around. Iran said on Friday that the EU’s proposal could be “acceptable”--at least if it gets an assurance “on the issues of safeguards, sanctions and guarantees”. Chiefly, Iran wants assurances that future U.S. Presidents cannot withdraw from the deal if reached now.
Deals, Mergers & Acquisitions
- DTE Energy and Ford have reached an agreement for DTE to supply Ford with 650 MW of solar energy capacity by 2025–the largest deal of its kind. The deal will allow Ford to source all of its electricity in Michigan from clean sources. The purchase–the largest in US history, will be made possible through DTE’s MIGreenPower program. By 2025, all vehicles Ford assembles in Michigan will be assembled using 100% carbon-free electricity. The deal will bolster Michigan’s solar energy by 70%.
- Devon Energy Corp has agreed to buy Validus Energy for $1.8 billion. Validus has 42,000 net acres in the Eagle Ford that are next to Devon’s existing leases. The deal should be complete by the end of next month. Validus produces 35,000 boepd (70% oil), with another 5,000 boepd to be added by the end of the year. It is Devon’s second U.S. purchase this year after it purchased Williston assets from RimRock last month. Devon said in addition to the 350 repeatable drilling locations, it could refracture another 150 Validus wells.
- Shell is looking to sell its 30% stake in the Cambo oil prospect in the North Sea. The project–an easy target for climate activists–didn’t have much hope of being developed as of the end of last year, when Shell said it was declining to invest in the project, leaving the remaining stakeholder, Siccar Point (who has since been acquired by Ithaca Energy), holding the bag on a project it had no intention of developing alone. At the time, critics of Shell’s withdrawal from the project said it would jeopardize the UK’s energy security. A successful sale of Shell’s stake in Cambo could breathe new life into the stalled project. It is the second-largest undeveloped resource in the North Sea basin. Shell has said that the economics are not supportive of investment in the project.
- Exxon’s sale of its offshore shallow water assets in Nigeria to Seplat has been curtailed by Nigeria’s oil regulator. Initially, Nigeria’s President had approved the deal, but after the regulator refused to approve it, Buhari withdrew his consent. No reason was given for the refusal.
- Exxon is looking to expand its trading operations, hoping to cash in on the extremely volatile market that has bolstered the bottom line of some of the world’s largest oil traders this year. While nothing has been finalized. Exxon planned on increasing its derivatives trading activities four years ago, but its efforts were stymied by the Covid outbreak.
- Australia’s Santos has acquired an underground pipeline route that could transport natural gas, by purchasing Hunter Gas Pipeline Pty Ltd, the company that owned that route. The pipeline would transport gas from its upcoming Narrabri project, which is set to come online mid-decade. Hunter has valued the future pipeline at A$1.2 billion. Santos is expected to start construction in early 2024.
Energy Markets
- The fire that raged across Cuba, destroying nearly half of the country’s main fuel storage facility at Matanzas–a supertanker port–and knocking out chunks of power, has finally been tamed. While the fire is not completely out, it has been reduced to manageable levels. At least four fuel storage tanks of ten had been engulfed in flames, although no official reports have surfaced yet detailing the exact extent of the damage. Each storage tank holds 50,000 cubic meters of fuel. The Matanzas fuel depot supplies the largest power generation plant in Cuba. Cuba routinely suffers blackouts due to aging power plans that are in desperate need of maintenance.
- Europe is using more natural gas as it becomes clear easing the burden on the fossil fuel in favor of other energy sources is easier said than done. Last month, Europe’s biggest source of power came from natural gas, overtaking nuclear, as about half of France’s nuclear power plants continue to experience outages due to corrosion and maintenance. France is no longer Europe’s biggest exporter of power due to its nuclear power issues. Sweden is now Europe’s biggest net exporter of power–although it mainly exports power derived from nuclear, hydro, and biofuels.
- There’s no question that the tight energy market and Russia’s invasion of Ukraine have cast a more favorable light on the oil industry. In Canada, the public is looking more fondly on its oil sector, with 60% of those polled by Leger in August favoring increasing Canadian oil exports.
- Poland has imported its first cargo of Murban oil as it tries to steer clear of Russian crude, which it has vowed to be completely done with by the end of the year. Poland’s PKN Orlen purchased the Murban from Total.
- Germany’s RWE AE said it would hold off on retiring its Neurath A coal-fired power stations in case it needs it this winter. The plan was shuttered on April 1 to keep with its plans to phase out coal, but Russia’s invasion of Ukraine and the resulting sanctions has encouraged countries in the UK to change those plans.
Regulation
- The Los Angeles Department of City Planning issued a draft ordinance designed to ban new oil and gas wells, with the ultimate goal of phasing out all oil and gas extraction within 20 years. According to the Mayor, “Dirty energy production has no future in Los Angeles.” As of 2020, the oil and gas industry supports 36,000 jobs and contributes $8.6 billion in gross regional product in the City alone, and contributes 4% of the city’s total General Fund budget.
