Politics, Geopolitics & Conflict
Thousands of protesters loyal to Shi'ite cleric Moqtada al-Sadr stormed the Iraqi parliament on Wednesday, leading to an ongoing political standoff for OPEC's second-largest oil producer. The protesters, completely controlled by al-Sadr, arrived in response to the nomination of a pro-Iranian force as Iraq's new leader. The nomination comes from a figure largely controlled at this point by Iran-former PM Nouri al-Maliki, al-Sadr's fiercest rival. Al-Sadr, extremely influential, is fighting for an anti-Iranian government in Iraq, and Wednesday's storming of parliament was a show of his power. He had them storm the parliament and then disperse by way of suggesting that al-Maliki take some time to think about his decision and whether he wishes to unleash the full force of al-Sadr. Parliament remains in a standoff as Shi'ite rivals (pro-Iranian and anti-Iranian) jockey for more leverage.
Rocket attacks earlier this week targeted a gas facility owned by the UAE's Dana Gas in Northern Iraq's Kurdistan region, with no claim of responsibility. This is the fourth time the facility has been attacked since June, along with other energy facility targets. The Khor Mor gas field was also attacked this week. With no claims of responsibility for these energy infrastructure attacks, they are likely meant to cause instability at a time when the Iraqi authorities and the Kurdish authorities are locked in an intense battle that has Baghdad gunning to take…
Politics, Geopolitics & Conflict
Thousands of protesters loyal to Shi'ite cleric Moqtada al-Sadr stormed the Iraqi parliament on Wednesday, leading to an ongoing political standoff for OPEC's second-largest oil producer. The protesters, completely controlled by al-Sadr, arrived in response to the nomination of a pro-Iranian force as Iraq's new leader. The nomination comes from a figure largely controlled at this point by Iran-former PM Nouri al-Maliki, al-Sadr's fiercest rival. Al-Sadr, extremely influential, is fighting for an anti-Iranian government in Iraq, and Wednesday's storming of parliament was a show of his power. He had them storm the parliament and then disperse by way of suggesting that al-Maliki take some time to think about his decision and whether he wishes to unleash the full force of al-Sadr. Parliament remains in a standoff as Shi'ite rivals (pro-Iranian and anti-Iranian) jockey for more leverage.
Rocket attacks earlier this week targeted a gas facility owned by the UAE's Dana Gas in Northern Iraq's Kurdistan region, with no claim of responsibility. This is the fourth time the facility has been attacked since June, along with other energy facility targets. The Khor Mor gas field was also attacked this week. With no claims of responsibility for these energy infrastructure attacks, they are likely meant to cause instability at a time when the Iraqi authorities and the Kurdish authorities are locked in an intense battle that has Baghdad gunning to take control of Kurdistan's oil and gas operations. Iran (using proxy militias) would benefit most from this instability, which reverberates throughout Iraq.
Libya should still be on everyone's radar as tensions among rival militias takes center stage in Tripoli after newly appointed prime minister (in waiting) Fathi Bashagha was slighted by a deal between former enemies, General Khalifa Haftar and incumbent/interim Prime Minister Dbeibah. Intermittent clashes are still setting the stage for wider violence in Tripoli just as the country, whose National Oil Company is now under new leadership, has managed to remove blockades and get production back up to 1.1 million bpd, though that figure has not been confirmed on the NOC website. In a note Friday morning, Mohamed Eljarh tweeted: "Sources on the ground have confirmed to me that staff of oil services giant #Halliburton in western and eastern #Libya have been told to evacuate immediately and ordered to leave their equipment/tools on sites." As of the time of writing, we have no confirmation and no additional context for this information, though abandoning equipment on site would suggest it is security related.
Deals, Mergers & Acquisitions
Saudi Arabia and Greece have discussed the possibility of an electric cable that would link their respective grids and supply Greece and Southwest Europe with cheaper green energy. The two parties signed an MOU that creates a framework of cooperation in renewable energy and electric interconnection, along with exporting that energy to Greece and Europe. It also mentions transporting hydrogen to Europe, energy-related cybersecurity, and the oil and gas industry. The MOU was signed during Saudi Crown Prince Mohammed bin Salman's trip to Greece-the first visit MbS has made to an EU nation since the Khashoggi murder. MBS said the agreement would be a "game changer" for the whole region.
Discovery & Development
TotalEnergies has started production from its Ikike field in Nigeria. The Ikike project, in partnership with NNPC, should produce 50,000 boepd by the end of this year. Total is in the process of selling its interests in 16 fields in Nigeria that produce 20,000 bpd, including pipelines. Total said in May that it was looking to focus on deepwater fields that are out of the fray of disruptions to its processes by locals. Nigeria's crude oil production has consistently failed to meet production targets set by OPEC+, and it revealed this week that its Trans-Niger Pipeline-with a capacity of 180,000-hasn't transported any crude for a month due to oil theft. Nigeria has been plagued by the high cost of crude oil, which has raised the cost of its imported gasoline, despite its crude oil producer status.
ADNOC Drilling has secured $2 billion in contracts for the Hail and Ghasha gas projects. ADNOC Drilling is the Middle East's largest national drilling company by fleet size, and nearly 80% of the value of the contracts will be funneled back to the UAE's economy and will contribute to the UAE's goal of becoming more gas self-sufficient.
Exxon continues to make inroads in Guyana's oil sector, and this week is no exception, with the oil giant making two new discoveries offshore Guyana. Exxon also said that it has already exceeded its original year-end daily production target for Guyana of 340,000 bpd.
Italian Eni and Algeria's state-run Sonatrach have announced another discovery in the Algerian desert in the Sif Fatima II concession in the Berkine North Basin. During testing, the well produced 1,300 bbl/day of oil and ~2 mmscfd of associated gas. This is being dubbed a "fast-track development" discovery and follows another discovery in March. In total, the partners will drill five wells in this basin.
Financials
Big Oil has had a great year so far, and Q2 was no exception. While governments mull windfall profits, Big Oil's results beat lofty expectations, with revenues and cash flow doubling, tripling, and even quadrupling from Q2 last year. Companies that made refining upgrades and participated in trading were rewarded with exceptionally high returns,
Equinor is one of the first large oil companies to report this quarter, setting the tone for the oil industry going forward. Equinor reported this week that its adjusted earnings more than tripled in the quarter to $5 billion as oil and gas prices soared. Equinor will double its dividend and increase its share buyback program by $1 billion. Adjusted earnings before tax ballooned to $176 billion, up from $4.64 billion in the same quarter last year. Equinor's Norway gas production increased during the quarter by 18%.
Hess's net income for Q2 came in at $667 million, or $2.15 per share. This compares to a net loss of $73 million during the same quarter last year. Its oil and gas net production (not including Libya) was 303,000 boepd, with Bakken production accounting for 140,000 boepd of that. The company's exploratory expenditures rose to $622 million compared to $429 million during Q2 2021. For Q3, Hess expects its net production, excluding Libya, to be between 330,000 boepd and 335,000 boepd. For Q4, Hess sees this rising to a range of 365,000 boepd to 370,000 boepd. Full-year production is expected to be 320,000 boepd, dragged lower from severe weather earlier this year that triggered unexpected shut-ins in the Bakken.
Shell has reached another quarterly earnings record for Q2, boasting adjusted earnings of $11.472 billion, breaking its previous $9.130 record set in Q1. Cashflow was up 26% over the previous quarter on the back of higher realized prices, higher refining margins, and higher gas and power trading and optimization results. Shell will initiate a $6 billion buyback program for Q3, on top of the $8.5 billion buyback program for H1 that is already complete. Despite hefty profits, Shell's dividend remains the same.
TotalEnergies is another member of the Big Oil club that saw revenues jump. Its net income came in at $5.7 billion in Q2, nearly three times higher than Q2 2021. Adjusted net income per share rose to $3.75. Cashflow more than doubled from Q2 last year, to $16.3 billion. The profits are in part a result of "exceptionally high refining margins on distillates and gasoline." Total will raise its dividend 5% year-on-year, and will initiate $2 billion in buybacks for Q3.
Spain's Repsol saw its Q2 net profit quadruple from the same quarter last year, with net income reaching $2.152 billion as oil and gas prices rose. Repsol has sunk $1.014 billion per year into its refineries, while other European countries saw declining capacity. Its investment turned out to be a good move for Repsol, which could now find itself in a position to respond to the great market demand at a perilous energy time for Europe.
Pemex's Q2 profit increased by a factor of 9 to $6.5 billion, although its overall debt stayed the same at $108.1 billion, with the government refusing to pay off any more of its debt on the higher oil prices. Pemex's production increased by just 1% over the same quarter last year. The two factors behind the higher profits were higher oil prices and a reduction in tax payments to the government. Pemex did manage to decrease its debt to suppliers by 45% to 203.5 billion pesos from Q1.
The two U.S. supermajors killed it for Q2 also, breaking all previous profit records and exceeding analyst expectations. Exxon reported Q2 earnings of $17.9 billion ($4.21 p/s)--quadruple the same quarter last year and more than triple from Q1 this year on the back of both higher production and higher prices. Exxon attributed this to the tight supply/demand balance for both oil and gas. Chevron's earnings broke their previous record also, reporting adjusted earnings of $11.4 billion ($5.82 p/s).