Politics, Geopolitics & Conflict
Once again, it’s China stepping into the vacuum in Iraq, targeting the oil industry. This time, Iraq is set up for a multi-billion-dollar bailout from Beijing in a deal that would see the Iraqi government repay the debt in the form of long-term oil supplies. The deal still has to be approved by the Iraqi cabinet, along with the final choice of Chinese company, which appears to have ZhenHua as the frontrunner. At the same time, China’s CNOOC and CNPC oil giant are believed to be considering acquiring Exxon’s 32.7% stake in Iraq’s supergiant West Qurna oilfield, which China really already largely controls through a same-size stake held by CNPC’s listed PetroChina and through a series of other contractual arrangements for the field.
Iran has imposed sanctions on the US ambassador to Yemen in a tit-for-tat response to Washington’s move to blacklist Iran’s envoy to Yemen as the situation here heats up. The diplomatic spat comes as the Saudi-led coalition fighting against the Iranian-backed Houthi rebels in Yemen say they intercepted and destroyed two explosive-laden boats launched by the Houthis south of the Red Sea.
With the Saudis unclear on what the relationship with the incoming US administration will be, Riyadh is hedging its bets with China more visibly, quietly considering oil-based borrowing with China, and now, hoping to sell natural gas to Beijing, as well as potentially expanding…
Politics, Geopolitics & Conflict
Once again, it’s China stepping into the vacuum in Iraq, targeting the oil industry. This time, Iraq is set up for a multi-billion-dollar bailout from Beijing in a deal that would see the Iraqi government repay the debt in the form of long-term oil supplies. The deal still has to be approved by the Iraqi cabinet, along with the final choice of Chinese company, which appears to have ZhenHua as the frontrunner. At the same time, China’s CNOOC and CNPC oil giant are believed to be considering acquiring Exxon’s 32.7% stake in Iraq’s supergiant West Qurna oilfield, which China really already largely controls through a same-size stake held by CNPC’s listed PetroChina and through a series of other contractual arrangements for the field.
Iran has imposed sanctions on the US ambassador to Yemen in a tit-for-tat response to Washington’s move to blacklist Iran’s envoy to Yemen as the situation here heats up. The diplomatic spat comes as the Saudi-led coalition fighting against the Iranian-backed Houthi rebels in Yemen say they intercepted and destroyed two explosive-laden boats launched by the Houthis south of the Red Sea.
With the Saudis unclear on what the relationship with the incoming US administration will be, Riyadh is hedging its bets with China more visibly, quietly considering oil-based borrowing with China, and now, hoping to sell natural gas to Beijing, as well as potentially expanding relations with China via hydrogen and other chemicals.
Jihadists launched another attack on a major gas project in Mozambique this week, with military sources claiming to have successfully intervened. The project in question is an LNG plant in Cabo Delgado province, which has witnessed a major escalation of insurgent violence in recent months and years. French Total SA is working on LNG support infrastructure for this project.
Gazprom Neft’s 30,000 bpd Sarqala oil field in the Kurdistan region of Iraq has stopped loading trucks amid protests against the KRG over civil servant pay. Exports from the field have been halted.
Covid-19 Update
Oman has created a new state-owned energy company, Energy Development Oman, which will own a stake in its largest oil block, Block 6, for the purpose of borrowing money, including investing overseas and in renewable energy projects. Shell holds 34% of Block 6, which has a production capacity of 650,000 bpd--all without affecting Oman’s balance sheet. The new company could try to sell $3 billion in bonds in H1 2021.
U.S. oil imports from Saudi Arabia have fallen to the lowest level in 35 years in October, to just 100,000 bpd, as The Kingdom tries to keep from adding oil to the all-too-visible U.S. crude inventories. While Saudi exports to the U.S. are down significantly from the 1.3 million bpd exported in April, this week saw the largest U.S. crude build since April, at more than 15 million barrels ...
Instead, Saudi Arabia has been focusing on its Asian market, where it has lifted its price of Arab Light, highlighting the strengthening crude oil demand in that region. It is the largest price hike in five months.
Deals, Mergers & Acquisitions
The energy landscape in the Eastern Mediterranean is about to shift. Eni and Egypt have finally come to a resolution over natural gas assets including Union Fenosa and SEGAS. The agreement will allow a liquefaction plant, Damietta, of SEGAS (50% Eni) with a capacity of 7.56 billion cubic meters annually to restart after idling for eight years. The restart is expected in the first quarter of next year. The deal struck still requires the approval of the EU.
Canada-based Whitecap said it would purchase TORC Oil & Gas Ltd in an all-stock deal valued at $430 million, adding to the consolidations for oil and gas companies that we’ve seen over the last few months. After the deal, Whitecap said it would be valued at C$4 billion.
Discovery & Development
Africa’s oil just got more attractive: The East African Crude Oil Pipeline Project (EACOP) has received its ESIA certificate. Total and CNOOC jointly own the pipeline, which will span 1,443 km and run from the Hoima district of Uganda to Tanga Port in Tanzania.
Exxon has done it again. The JV of Exxon and Petronas has discovered more oil from its Sloanea-1 exploration well in Suriname’s Block 52, where Petronas is operator. This is close to Exxon’s finds across the border in Guyana, and testing will now commence to determine the resource potential. Exxon has been prioritizing its spend to these high-value prospects offshore Guyana and Suriname. Exxon holds 50%.
Regulations and Legislation
The Trump Administration has opened for bidding the first federal public lands auction in California in eight years. The auction covered 4,100 acres in California’s Kern County, and netted $46,000 in bids at an average price per acre of $11--much lower than the typical average lease sale over the last few years of over $300 per acre.
Danish Parliament has voted to end all offshore oil and gas production within 30 years. Denmark is also canceling all upcoming oil and gas exploration and production permits. Denmark currently produces 100,000 boepd.
The Mexican government is mulling over additional tax relief measures for state energy giant Pemex to help it reduce the biggest debt load in the global oil industry
Renewables
Giant Shell is undergoing a bit of a voluntary purge with the departure of several clean energy executives over a divergence of strategies for the company’s “greening”. The departures come right before Shell’s year-end energy transition strategy announcement, and the indication is that those who have resigned were hoping for a more aggressive green push that the executive is willing to undertake.
While Eni jockey’s for LNG assets in Egypt, the oil major is snapping up a 20% stake in the world’s largest wind farm from Equinor and SSE, who each are selling 10% stakes in Dogger Bank A&B.
McDonald’s is financing 3 major renewable energy projects in 4 US states (Illinois, Oklahoma, North Carolina, and Ohio). The investment, which comes in the form of virtual power purchase agreements, are in addition to two additional solar projects involving McDonald's in Texas. Once up and running, the 3 new projects are expected to reduce the fast-food behemoth’s emissions by 2.5 million metric tons.
Renewable energy stock superstar NextEra has acquired eIQMobility software provider in a move in line with the company’s expectations that we will see a major shift away from ICE cars, with renewables representing more than one-fifth of US energy demand by 2050.
