A Crucial Battle In The Yemen War

Geopolitics

This week has seen major clashes between Houthi rebels and Yemeni government forces over control of Marib city, the last significant stronghold of the government in the oil-rich province of the same name. In two days of clashes, more than 130 fighters have been killed, according to government officials. Yemeni government forces are being supported by Saudi-led airstrikes on rebel positions in a battle that could be pivotal in the Yemen war.

Hungary has signed a 15-year natural gas supply deal with Russian Gazprom, sparking the ire of Ukraine and other members of the European Union. The deal bypasses Ukraine, guaranteeing Hungary half of its consumption needs piped through Serbia and Austria, and thus depriving Ukraine of much-needed revenues. This comes as members of the European Parliament have urged the European Commission to investigate whether Gazprom has breached "abuse of dominance" rules thereby contributing to the rising cost of natural gas in the region. EU investigations and decisions on matters such as this largely lack teeth.

In the ongoing conflict over who will control Libya's oil that in part has played out as a battle between the head of the Libyan National Oil Company (NOC) and the Oil Ministry, the latest development has been the resignation letter of deputy minister Refat Al-Abbar. Al-Abbar had opposed the Oil Minister's decision to suspend long-time NOC head Sanalla, whose suspension was revoked by Prime Minister Abdulhamid Dbeibeh. There is speculation that Al-Abbar was a supporter of General Haftar. Al-Abbar submitted his resignation on September 28th, and two days later, Oil Minister Mohamed Oun rejected that resignation in the name of stability.

Deals & Discoveries

While Apache Oil Corp and Total Energies have racked up the offshore discoveries in Suriname (in the prolific Guyana-Suriname basin), this week, Apache said it has plugged and abandoned the Keskesi South-1 well after encountering non-commercial quantities of hydrocarbons.

Azerbaijan and Turkey have finally reached a new gas deal after a year of haggling. The previous 20-year contract expired in April. The previous contract had Turkey importing 6.6 billion cubic meters of gas each year from Azerbaijan. But rumors surfaced over the summer that Azerbaijan may not have enough gas to fulfill its domestic needs. Other rumors suggested that the negotiations were being tripped up over price. The agreement was never really in jeopardy. Azerbaijan relies on TANAP - which passes through Turkey - to send its gas to Europe, although those terms are negotiated under a separate contract. And Turkey enjoys having Azerbaijan as another supplier for the sake of diversity. BP operates the Shah Deniz gas field, where the gas that is sold to Turkey originates. The flow of gas stopped sometime in May while the two continued negotiations. Turkey found enough gas this year to supply a third of its domestic needs once it reaches peak output by 2027, with hopes of pumping gas from its largest-ever natural gas find, Sakarya, in 2023.

India's BPCL will sink $13.5B into petrochemicals, biofuels, gas, consumer retail, electric mobility, and digital transformation across the next five years. Of that, $4B will be set aside to expand petrochemical capacity and to improve refining efficiencies. Another $2.4B will be allocated to upstream oil and gas exploration and production.

The ADNOC Drilling Company's public offering of $1.1 billion received orders to the tune of $34 billion from eager investors, shining a light on the enthusiasm for equity deals, particularly in the energy industry. ADNOC pumps almost 100% of the UAE's oil and gas, but its desire to diversify its economy away from oil and gas has triggered asset sales. Baker Hughes holds a 5% stake, which it will keep.

The PennEast Pipeline has been scrapped after the project failed to obtain its essential water quality certification amid green pushback from New Jersey. This, even after the project won a case in the Supreme Court earlier this year over eminent domain issues.

CNOOC has discovered 730 million barrels of heavy oil reserves at Bohai Bay in the Kenli 10-2 oilfield. The appraisal well was tested to produce 569 barrels per day. Bohai already has 1.44 billion boe as of last year, accounting for one-third of CNOOC's total production.

Saudi Arabia took another giant step toward the consolidation of its large-scale industrial firms in a deal that will merge the Saudi Industrial Investment Group (SIIG) and the National Petrochemical Co for a combined market cap of over $11 billion. The merger will create a petrochemicals behemoth.

Regulation

Canada's second-largest pension fund, Caisse de dépôt et placement du Québec, announced this week that it will exit its $3B in oil production assets by the end of next year. It will also reduce its carbon intensity by 60% by the end of this decade. It is the first institutional investor in Canada to exit oil production assets.

A campaign group, Uplift, has reviewed HMRC data regarding government payments to oil companies operating in the North Sea. The analysis of the payouts showed that many oil companies, including Exxon, Shell, and Repsol, received more money from the government than they paid in taxes. The argument of the campaign is that the North Sea oil industry is not fiscally beneficial to the UK.

The gasoline shortage in the UK, created by a tanker truck driver shortage, reached epic proportions earlier in the week, with up to 90% of some gas stations in some metro areas out of gasoline. The government pleaded with consumers to stop panic buying, which has exacerbated the shortage. On Tuesday, the UK put its army on standby to deliver gasoline to stations.

Enbridge's Line 3 pipeline - after intense pushback - is now complete. The pipeline will be in service on October 1, doubling the capacity of the line to 760,000 bpd, and carrying Canadian crude to the U.S. midwest. Line 3 will operate at partial capacity in October (620,000 bpd), but will be fully utilized in the 4th quarter.

Renewables

Vineyard Wind has plans to build another massive wind port in Salem, Massachusetts, to be operated by Crowley Maritime Corp. Vineyard must first win a procurement bid from Massachusetts. The port would encompass 42 acres, which it purchased from a local power company, and would be used to assemble turbines and stage them to prepare them for installation offshore.

Iberdrola has completed its first hybrid wind/solar farm in Port Augusta. The project includes 250,000 solar panels and 50 wind turbines, generating 210 MW of wind power and 107 MW of solar power capable of supplying energy to 180,000 homes when it comes online.

GM said it plans on having all its U.S. sites powered by renewable energy by 2025--five years ahead of schedule. GM is also teaming up with PJM Interconnection and TimerRock to track carbon emissions from electricity use at its U.S. sites.