Francesco Verre

A Busy Week in Oil and Gas (May 27 to June 2, 2024): Deals, Discoveries, New Projects and Decarbonization Efforts #Europe • TotalEnergies' Patrick Pouyanné remains at the helm for another three years, signaling stability for the French energy giant. • Subsea 7 and SLB both secured significant contracts in the North Sea, highlighting continued investment in this mature basin. • Sustainability is a growing focus, with Neste storing sustainable aviation fuel in Rotterdam and Enagás playing a leading role in LNG bunkering for decarbonized maritime transport. #Africa and #MiddleEast • North African partnerships are flourishing, with Sonatrach signing a gas deal with Slovenia's GEOPLIN and ADNOC awarding a stake in an offshore concession to Socar (Azerbaijan). • Baker Hughes landed a major contract with Sonatrach for a gas valorization project in Algeria. #Americas • Brazil dominated the news this week, with Final Investment Decisions (FIDs) for the second phases of the Atapu and Sepia developments, led by a consortium including TotalEnergies, Petrobras, Shell and others. • Petrobras further bolstered its presence in the Santos basin with the acquisition of two new FPSOs and the arrival of the FPSO Maréchal Duque de Caxias for the Mero field. • In North America, ConocoPhillips' acquisition of Marathon Oil Corporation marks a significant consolidation in the US oil and gas landscape. • Canada also saw movement, with Vaalco successfully bringing four new wells into production and Altagas and Vopak announcing a major investment in an LPG export facility. • Subsea 7 secured another contract in Brazil, this time for the development of the Búzios 9 field. #Asia and #Oceania • Santos (Australia) is expanding its LNG reach, signing a new sales contract with Hokkaido Gas in Japan. • Long-term LNG supply partnerships were reaffirmed between Korea Middle Power and Vitol.

14

UAE's #ADNOC have just announced a deal with U.S. #NextDecade for an equity and #LNG offtake ...... Reuters was the first to break this story more than two months ago! https://lnkd.in/eSg9cndS MAY 20, 2024 ADNOC Secures Equity Position and LNG Offtake Agreement in NextDecade’s Rio Grande LNG Project HOUSTON--(BUSINESS WIRE)--May 20, 2024-- ADNOC announced today the acquisition of a 11.7% stake in Phase 1 (Trains 1-3) of NextDecade Corporation’s (NextDecade) (Nasdaq: NEXT) Rio Grande LNG (RGLNG), a leading liquefied natural gas (LNG) export project located in Texas, United States (US), which is expected to produce a less carbon-intensive LNG. Additionally, ADNOC and NextDecade announced that they have entered into a 20-year LNG offtake agreement from RGLNG Train 4. This press release features multimedia. View the full release: here: https://lnkd.in/eR9NZNRr

81

1 Comment

ENERGY ANALYTICS two major reasons! 1-) low oil prices started in 2014 and continued through also due to covid pandemia, where investments cut down drastically 2) climate changes and green energy pressed on supply side of oil and gas! I belive the second has more effect than the one. But the result will be wounding in the coming decade, where oil prices increase due to supply shortages.

27

1 Comment

Update on negotiations between Russia and China on the #PowerOfSiberia2 gas pipeline.... A few quotes from this #FT article: "Russia’s attempts to conclude a major gas pipeline deal with China have run aground over what Moscow sees as Beijing’s unreasonable demands on price and supply levels, according to three people familiar with the matter." "The people familiar with the matter said China had asked to pay close to Russia’s heavily subsidised domestic prices and would only commit to buying a small fraction of the pipeline’s planned annual capacity of 50bn cubic metres of gas." "Russia’s lack of an alternative overland route for its gas exports means #Gazprom would probably have to accept China’s conditions, Gabuev said. “China believes time’s on its side. It has room to wait to squeeze the best conditions out of the Russians and wait for attention on the China-Russia relationship to move elsewhere,” he said. “The pipeline can be built rather quickly, since the gasfields are already developed. Ultimately the Russians don’t have any other option to market this gas.”" #FinancialTimes https://lnkd.in/gX4YxcvJ

5

2 Comments

More on the new round of #sanctions targeting Russia's energy sector (#LNG, oil) rolled out by the US yesterday (12 June 2024). "New US #sanctions aimed at placing more curbs on Russia's #LNG and oil export ambitions." "Russia’s #ArcticLNG2 development faces additional hurdles in supplying liquefied natural gas to international markets after the US imposed new #sanctions targeting seven new Russian-built #LNG carriers." "The #USTreasury has also sanctioned three more #Novatek #LNG projects: #ObskyLNG, also known as Obsky Gas Chemical Complex; #ArcticLNG1; and a planned third phase of Arctic LNG [#ArcticLNG3]." "Other Russian energy-related #sanctions have also been proposed by the US #DepartmentOfState, including #Novatek’s newest #LNG project in the north of the country, the 20.4 million tpa #MurmanskLNG scheme, which aims to use gas from Russia’s pipeline network and energy from a nuclear power station to drive its refrigeration and liquefaction compressors. #MurmanskTransgaz, a company building gas pipeline infrastructure related to the #MurmanskLNG project is also included in the latest sanctions proposal." https://lnkd.in/g39Bck5D

12

3 Comments

Senegal's just produced its first barrels of offshore oil – but its E&P outlook may already be darkening. The new government of President Bassirou Diomaye Faye – and his Prime Minister and mentor Ousmane Sonko – has pledged to review and potentially renegotiate E&P contracts, affecting companies such as bp, Kosmos Energy and Woodside Energy. But those contracts contain stabilization clauses to protect investors from changes. So what next? An audit will probably still go ahead, and some government-investor compromises may be needed so that political promises can be kept while vital revenues still flow to the government and IOCs. But it will be a difficult, high-stakes balancing act for an inexperienced leadership, and nearly 400,000 boe/d of output from unsanctioned project phases could be at risk should contractual and policy uncertainty persist. It’s worth remembering that in 2017, Tanzania under President John Magufuli threatened to revise mining and hydrocarbon contracts. Tanzania ended up with costly court cases in the mining sector, a drop off in foreign E&P investment, and a stalled LNG project. Will Senegal learn from that? Read my blog piece below for more thoughts. #Senegal #explorationandproduction #Africa #oilandgas #upstream #energy #exploration

21

https://lnkd.in/e9UayAin Interesting to see the Chevron and ExxonMobil poking around in #shale #naturalgas in Algeria. The geology is definitely favorable but will need to see on the above-ground conditions and the economics. In the early days of shale all the majors were staking out international positions. Outside of Argentina and China those dreams generally faded due to a range of factors including above ground risk, service capacity and access to markets - all of which ultimately added costs. But modern shale wells look very different than they did even 5 years ago, with longer laterals, more accurate landing of horizontals, fracking of multiple wells at once and large-scale water recycling. And some see a brighter future for gas in Europe as it looks to back out more Russian volumes (even if it is taking more LNG). It will be interesting to see if the US majors can make Algeria work.

2

A REAL NEW ENERGY MIX : I believe Interesting to understand through this example of US Utility, how they plan to decarbonise (escape from Oil, Carbon Generation) in the next decades. by 2039, Dominion said it plans to deploy about 3.4 GW of new offshore wind in addition to the 2.6 GW already in development, about 12 GW of new solar, and about 4.5 GW of new battery storage. The company also plans to deploy five small modular nuclear reactors starting in the mid 2030s, for a total of 1,340 MW. https://lnkd.in/d4_V-Q3a

5

A thriving energy business is synonymous with every successful economy. Fact. It's a story older than time. For our UK energy sector to thrive we need the great minds that exist in our talented, motivated workforce to STAY. For them to stay they need jobs, for their jobs to stay we need an oil and gas business here in the UK for a long time to come. There are plenty of jobs in economies where the fundamental importance of the energy mix is appreciated and respected. And planes to export our lovely people there. Plenty of familiar hardware required is already there.. as our assets have moved and continue to move to other regions. The 'oil and gas sector' are NOT 'anti energy transition'.... we ARE the flipping energy transition. Tying our hands behind our backs and removing our ability to protect jobs in this country when we hold the keys to unlock the transition is MADNESS. On what planet do you take an egg out of a nest and still expect it to hatch later on?

82

10 Comments

And in more interesting news for SEE, Botas has announced a 4bn m3/yr LNG contract with Shell, with deliveries starting in 2027. Unlike the Exxon deal, for which there was an 'agreement' reached but no formal confirmation from either Botas or Exxon, this one has been confirmed by both Botas and Shell. The LNG will be supplied from Shells "US and global portfolio" from 2027, and appears to be an FOB contract given Botas' note that "We are also pleased that BOTAŞ will acquire new capabilities in the field of LNG transport via ships by receiving the LNG at the loading port within the scope of the agreement." This will allow Botas flexibility to send the LNG wherever it wants, if not needed in Turkey then it can be sold to Europe or Asia. This deal will aid Turkey's ambitions of becoming a regional supplier as well, as it can allow for greater utilisation of the 5 (!) terminals there even outside of peak periods in winter. #gas #LNG #Botas #Shell #trading #Turkey #US #Exxon

40

1 Comment

‼️ The AGE of MEGA- DEALS ‼️ The fever of merger and acquisition continues to shake the #energy industry. The US #oilgas sector is at the epicenter of Such trend. The Conoco deal would be “just” an additional one of the several multi-billions dollar operations seen in the sector over the last few months, starting from the two “US elephants” Exxon and Chevron. If the US #oilandgas is the undisputed star of such new wave - and unsurprisingly given the 🇺🇸 #leadership as the world’s top oil and gas producer - the hydrocarbon area is not the only one touched by such trend. The BHP offer on Anglo American is sending shockwaves through the mining industry, this time triggered by rising needs of critical minerals that underpins the manufacturing of #greentech. In the meantime, the size of new renewables plants gets unprecedented dimensions- with a proposed solar one in #india - as big as 5 times the area of Paris… The interesting factor is that parallel to a growing deployment of decentralized solutions, auto production options, local energy communities, etc… there is an overall trend of consolidation and search for economies of scale. The key question is therefore is if in the end the motto “bigger is better” remains as valid as ever… Waiting for the next one… #investment #technology #sustainability #energy

83

2 Comments

⚠📈 Goldman Sachs predicts that international crude oil prices could spike by $20 per barrel if Iran’s oil production drops significantly due to escalating Middle East tensions. A loss of 1 million barrels per day (bpd) from Iran’s supply could drive this increase, but only if OPEC+ does not intervene by boosting production. Key OPEC+ producers like Saudi Arabia and the UAE have enough spare capacity to offset potential losses, reducing the impact to a $10 per barrel increase. 🏭🛢 Analysts highlight that Saudi Arabia could increase output by 3 million bpd and the UAE by 1.4 million bpd, which would be sufficient to cover a complete loss of Iranian oil production. Iran currently produces 3.5 million bpd, exporting 1 million bpd, mostly to China despite U.S. sanctions. While a total loss of Iranian supply is not the base case, experts note that OPEC+ spare capacity could stabilize the market if needed. 🔥🔺 Oil prices surged by 1% early Friday as markets reacted to Iran’s missile attack on Israel and the potential for further conflict. Though analysts see the chance of major disruptions such as attacks on regional oil infrastructure or closure of the Strait of Hormuz as unlikely, a broader Middle East crisis could push oil prices into the triple digits.

2

In this edition of Energy Market Drivers from Global Risk Management (GRM), I discuss the current state of the global oil market, with a particular focus on the significant impact of recent events in the Middle East. Notably, Iran's muted response to Israeli "modest" retaliation has decreased the geopolitical premium in oil and gas. As a result, the market focus is again back on fundamentals, which remain relatively strong. The lower geopolitical premium makes an extension into Q3 and Q4 of the voluntary OPEC+ production cuts more likely. Meanwhile, demand is expected to increase both seasonally and cyclically in Q2 and Q3. Oil prices are likely to trade between USD 86 and USD 93 in the near future. I see USD 87 as an attractive buying level in Brent. I still see a high probability that USD 100 will be tested in Q3. Additionally, I discuss the recent contango in the front of the ICE Gas oil curve. Contango favors inventory holders, allowing for more cost-effective hedging than the usual backwardation. But given the fundamentals in the distillate market, the contango might be temporary. See the full publication 👇 #opec #oil #OOTT #riskmanagement

39

In the latest development in the oil market, the decision by OPEC+ to increase oil supply has raised concerns among physical traders. This move comes as there is limited evidence of a significant improvement in the market and lackluster demand from China, one of the world's largest oil consumers. While the immediate impact of the increased oil supply on prices is evident, the long-term consequences are uncertain. The market and traders will continue to closely watch the developments in the coming weeks to gauge the full impact of this decision on future oil prices and market dynamics. #crudeoil #traders #volatility #oilprice #oilsupply #demand #energy https://lnkd.in/gdMzx-AP

15

The Editorial Board of the Times UK writes, declaring a target is easy. Actually meeting it may involve onerous costs. Hence a belated and sensible decision by bp to formally abandon a target to cut its oil and gas production by 2030. This revision of strategy matters not only because of BP's size. It exemplifies the trade-offs that environmental policy necessarily involves and that green campaigners typically skate over. The gov’t should take careful note, and follow BP's lead. BP's target, announced in 2020, was to reduce oil and gas output by 40% by the end of the decade, offset by an increase in renewables. This was revised down last year to a reduction of 25%. Now, under a new CEO, BP is set to abandon the target while pursuing investments in the Middle East and the Gulf of Mexico to increase oil and gas production. Green campaigners may construct a morality tale about the heedlessness of big business towards planetary sustainability. The pressures on BP's share price may also be thrown into a mix of allegations about the iniquities of capitalism. But in truth the company's decision is not only financially prudent but environmentally responsible. The notion that all good things are compatible is a besetting temptation. In this case, too many suppose stringent targets to mitigate climate change will stimulate investment and thereby expand the economy. It’s pure guesswork. Even if clean energy is indeed the one-way bet the gov't supposes, there’s no guarantee it will benefit the economy. By stimulating imports of, say, domestic heat pumps from China, an ambitious target for net zero may even act as a drag on growth and, through transport costs, increase global emissions. BP appears to have arrived at a comparable conclusion in its business strategy. Achieving net zero emissions at speed may have no net benefit to the planet while merely yielding a competitive advantage to competitors overseas. The desire to mitigate climate-change cannot change financial facts. The most reliable way of reducing emissions is to curb output in aggregate, at great cost to living standards. That it can be achieved painlessly by investment in renewables lacks evidence. The technology for decarbonizing the domestic, let alone global, economy does not yet exist on the scale or in the sophistication needed. The role of competitive markets in impressing upon BP the need to rethink its strategy should also be appreciated rather than maligned. Investors are right to scrutinize the strategy of the businesses in which they invest. And the need to take account of tangible costs relative to speculative benefits ought to be recognized by policymakers, too. Our Take: This is a very sound piece. The only pushback we'd offer is on the Board's belief—or pretension—that net-zero can and should still be achieved by *2050*. There's very little chance that it will happen. But that's a truth for the Board to tackle another time. ♻️🛢️👀 #netzero #energytransition

46

11 Comments

Ratcliffe-on-Soar’s closure has been widely celebrated as it made the UK the first G7 country to fully eliminate coal power. But what if the replacement is just as damaging? Is another dirtier secret hiding in plain sight? Environmental scientist Robert Howarth's (no relation) analysis of US LNG argues there is: https://lnkd.in/dMKrSJzw His conclusion: US LNG has a 33% higher footprint than coal, largely due to high methane leakage. If true, it drives an LNG tanker through the UK's emissions leadership credentials. Most UK gas supply is imported. ~40% comes via pipeline from Norway. Sourcing from friendly, reliable neighbours with lower emissions intensity makes sense. As UK LNG imports nearly trebled in just 5 years to 2023, the US rapidly emerged as dominant supplier. Last year, US LNG was 26% of imports, up from zero pre-2018 and 4x more than Qatar. Although down this year, US LNG – largely shale gas whose extraction, processing, liquefaction, shipping and regasification results in total emissions comparable to coal – is now effectively the UK's supplier of last resort. Meanwhile, rising policy barriers to UK gas investment are accelerating the decline of domestic supply, which has ~1/4 the average emissions of LNG imports. Besides the domestic socio-economic impacts, this seems environmentally absurd. As the North Sea is mature, arguably it can no longer fill the gap. But maturity is partly a self-fulfilling prophecy: the less that is invested, the more mature it gets, hastening a disorderly decline. This creates still heavier dependence on emissions-intensive imports and undercuts efforts to reduce domestic emissions intensity (which have gone sideways for the past 5 years). Since much of US LNG's emissions fall outside the UK, they don't appear in the UK headline "territorial" emissions figure. Fixating on that target means external emissions - even if serving the UK market and clearly impactful - may get conveniently ignored. This may partly explain the strange de facto policy of favouring dirtier imports over cleaner domestic production, with its associated jobs, supply chain benefits and tax revenues. Why not just stop using gas? Accelerating the renewable ramp-up, storage rollout, grid upgrades and electrification are all essential, but gas still won’t disappear anytime soon given its key role in heating (~85% of homes), power (>30% of supply) and industry. Like coal before it, UK gas demand is in long-term decline, down 36% since 2010, accelerating in 2022-23 amid sky-high prices. Those price spikes – and higher “new normal” price levels post-crisis – also reflect the enduring value of flexible, dispatchable gas for energy security. A domestic gas supply revival looks less likely than ever, but certainly seems better than excessive reliance on LNG imports. https://lnkd.in/dXpGaiAA

3

There are some interesting forecasts for the energy outlook in 2024. The International Energy Agency (IEA) expects oil demand to grow by 1 million barrels per day (mbd), while OPEC forecasts a stronger increase of 2.4 mbd. This large difference shows the difficulty and unpredictability of energy modelling. The bp Energy Outlook provides a midterm view, indicating that oil demand will not change much until 2030 in its 'Current Trajectory' scenario (see chart below). This scenario is based on two opposing factors: a decrease in oil use for transportation due to improved fuel efficiency and the expansion of electrification, versus an increase in oil demand for feedstocks, driven by the rising prosperity in emerging economies.   What are your views on drivers for oil demand in the next 5-10 years?  #EnergyForecast #OilDemand #FutureTrends

39

3 Comments

MONDAY MACRO VIEW: OPEC+ Production Cuts and What Comes Next ? In my latest for Primary Vision - Frac Spread Count I write about OPEC+ cuts and the overall oil markets. From the article: “The planned unwinding focuses on three key production tranches agreed upon by OPEC+ members. The voluntary cuts of 2.2 million barrels per day (bpd) by eight member nations are now set to phase out gradually starting in April 2025 and continuing through September 2026. The broader collective cut of 2 million bpd will be extended through 2026, while no definitive plans have been announced for the nine-member voluntary cuts, a clear sign of the group’s hesitance to risk oversupplying the market.” Also < For OPEC+, maintaining the current cuts is essential to prevent a price collapse, but it comes at a cost. By supporting prices, the group effectively subsidizes its competitors, allowing them to capture market share in regions where demand growth persists. > Link to the full article: https://lnkd.in/d-GdgpT2 Gulf Intelligence Bloomberg BBC News Euronews Techopedia #oilprices #oilmarkets #oil #gas #trump #us #china #oildemand #oilsupply #iran #cuts #opec #pricewar #marketshare #recession #tariffs #economy

12

2 Comments