Politics, Geopolitics & Conflict
- The Navalny poisoning has even farther-reaching implications for geopolitics and oil than just the NordStream2 outcome. Under immense pressure for what masses of protesters say was a rigged election for a sixth presidential term, Aleksandr Lukashenko, the European continent's last dictator, is now cozying up to Moscow for Putin's support against protests that threaten to overthrow him. He is doing this in two ways: 1) He is trying to lend the Kremlin a helping hand by claiming to have intercepted German chats proving that the Navalny poisoning was fabricated in order to discourage Russia from intervening in Belarus on Lukashenko's behalf (a weak argument, at best); and 2) By cutting a deal with Russia to potentially re-direct oil flows from Lithuania to the Russian port of Ust-Luga. This is, in part, Lukashenko's retaliation over European sanctions due to electoral fraud allegations, for which he threatened to cut off European transit routes. Not coincidentally, Lithuania is hosting the U.S. military, which deployed tanks and troops on Friday for an extended two-month stint near the border with Belarus.
- NATO claimed Friday that Turkey and Greece had agreed to start to help reduce the risks of military accidents in the eastern Mediterranean over offshore energy rights. However, Greece denied any such agreement, saying that first, Turkey has to withdraw its vessels from the area where it is carrying out drilling research.
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Politics, Geopolitics & Conflict
- The Navalny poisoning has even farther-reaching implications for geopolitics and oil than just the NordStream2 outcome. Under immense pressure for what masses of protesters say was a rigged election for a sixth presidential term, Aleksandr Lukashenko, the European continent's last dictator, is now cozying up to Moscow for Putin's support against protests that threaten to overthrow him. He is doing this in two ways: 1) He is trying to lend the Kremlin a helping hand by claiming to have intercepted German chats proving that the Navalny poisoning was fabricated in order to discourage Russia from intervening in Belarus on Lukashenko's behalf (a weak argument, at best); and 2) By cutting a deal with Russia to potentially re-direct oil flows from Lithuania to the Russian port of Ust-Luga. This is, in part, Lukashenko's retaliation over European sanctions due to electoral fraud allegations, for which he threatened to cut off European transit routes. Not coincidentally, Lithuania is hosting the U.S. military, which deployed tanks and troops on Friday for an extended two-month stint near the border with Belarus.
- NATO claimed Friday that Turkey and Greece had agreed to start to help reduce the risks of military accidents in the eastern Mediterranean over offshore energy rights. However, Greece denied any such agreement, saying that first, Turkey has to withdraw its vessels from the area where it is carrying out drilling research.
- The U.S. has added more companies to the sanctions list over oil dealings with Iran, including Iran-based Abadan Refining Company, China-based Zhihang Ship Management CO Ltd., New Far International Logistics LLC, Sino Energy Shipping Ltd) and UAE-based Chemtrans Petrochemicals Trading.
- Russia's Rosneft denied media reports that it is shipping petroleum products to North Korea. Earlier this week, South Korean media reported that North Korea boosted its imports of refined oil products from Russia by 16 percent last year, despite the wide-ranging sanctions. The Russian oil products supplied to North Korea were produced by the state energy giants Rosneft and Gazprom, South Korean Yonhap news agency reported.
Markets & Trends
- What happens when even cleaning products ditch fossil fuels? With COVID hastening the transition to de-risking, including with regard to climate change, Unilever has now jumped on board, saying it would eliminate fossil fuels in its cleaning products by 2030. By that year, Unilever plans to replace 100% of carbon from fossil fuel feedstocks in its cleaning products with renewable or recycled carbon. If this becomes a trend, we are looking at a reduction in demand from this segment, considering that chemicals derived from fossil fuels represent around 12% of global oil demand and would have nominally accounted for over one-third of oil demand growth to 2030.
- Saudi crude oil exports to the U.S. are still on the downward trend, hitting what appears to be their lowest point in a decade, according to Bloomberg's review of tanker data. This data signals to traders that the Saudis are tightening supply, which should positively affect oil prices.
- Exxon, reeling from being kicked out of the Dow, is now considering worldwide job cuts, after it announced it would issue voluntary layoffs in Australia. Exxon is now looking at its operations in every country it does business in, to make sure the company is "right-sized" and "stronger for the future". Exxon already started the job cut process in the United States, after employees who landed near the bottom of performance evaluations were given 30 days to decide if they wanted to meet new goals set for them or whether they wanted to exit the company. Employees in the bottom category represent between 8% and 10% of the company.
Deals, Mergers & Acquisitions
- Saudi Aramco has delayed a $20-billion petrochemical and LNG project as it looks to save cash and preserve its dividend. Instead of the large-scale project at Yanbu in eastern Saudi Arabia, Aramco is now mulling over adding petrochemical facilities to already existing refineries.
- In a deal valued at $448 million, Colorado-based Liberty Oilfield Services is acquiring Schlumberger's fracking arm, with Schlumberger taking a 37% stake in the new combined company.
- Pablor Flores, the head of the Petroecuador, will resign ahead of a merger between two state-run giants, Petroecuador, the refining arm, and Petroamazonas, the upstream arm. The merger is set to be complete on Jan 1.
- Israel-based Delek Group is contemplating a merger with its North Sea arm, Ithaca Energy, and another international energy company that has not yet been named. The merger is thought to be part of the IPO process for Ithaca. Ithaca purchased Chevron's North Sea assets in 2019, just two short years after Delek purchased Ithaca. Delek will likely get cash from the merger, while Ithaca will control half of the larger business. The cash will come in handy for Delek, which is struggling to keep up with all of its debt.
Discovery & Development
- Canadian Husky Energy has announced its first oil production at the Spruce Lake Central thermal project in Saskatchewan. This is Husky's sixth 10,000 bpd thermal bitumen project in the last five years.
- Saudi Aramco has announced two new discoveries in the country's north. The Abraq al Toloul oil find is flowing at ~3200 barrels bpd (light crude) and 3.5 million cubic feet per day of natural gas. The second find, the Hadabat al Hajara, is flowing at ~2,000bpd of condensate and 16 MMcfd of natural gas.
- Chevron said it is delaying restart at the second of three huge LNG production units at its $54 billion Gorgon LNG plant in Western Australia until October. Train 2 at Australia's second-largest LNG plant has been shut since May for maintenance. The company had hoped to complete the repairs by early this month but is delaying it after cracks were found in the production unit's propane kettles.