Civilians Riot In Sudan Following Military Coup

Geopolitics

In a long-running spat with Morocco over the Western Sahara, Algeria has moved to halt all natural gas exports to Spain through Morocco. That move comes only a few months after Algeria cut diplomatic ties with its neighbor. Typically, Morocco would benefit from 1 billion cubic meters of gas from Algeria. Morocco's government is shrugging off this latest diplomatic salvo from Algeria, suggesting that the 10% of electricity this gas powers can be replaced without much risk. Just a day after this move, Algeria claimed that three truck drivers had been killed in a bombing outside of Mauritania, blaming the attack on Morocco. The US has recognized Morocco's sovereignty over the Western Sahara and controls approximately 80% of the territory. Algeria supports the Polisario Front, which is fighting for independence in the Western Sahara.

Sudan is now facing a civilian revolt following the military's October 25th coup, with the United Nations now attempting to broker a renewed power-sharing agreement before a revolt hits a point of no return. Coup leader General Abdel Fattah al-Burhan may be forced into power-sharing regardless, as civilian riots against the military's move prove much more serious than anticipated.

Deals & Discoveries

Continental Resources, Inc (controlled by big-time wildcatter Harold Hamm) has secured a $3.25-billion cash deal to acquire Permian assets from Pioneer Natural Resources in the Delaware Basin.

OPEC's #2 producer is negotiating with OPEC's #1 for gas exploration contracts in Iraq's Western Desert. Iraq is also in talks with Aramco over other energy, power, water, and petrochem contracts. Overall, the contracts will be worth tens of billions as Iraq looks to get foreign investors onboard. Solar energy projects are also being discussed. The news of the talks with Aramco follows other talks that Iraq has had recently with TotalEnergies totaling $27 billion.

Oman is calling to bypass the Strait of Hormuz when it comes to oil and gas exports in the region, by transferring oil and gas exports to the Arabian Sea through Oman. Such a pipeline project that would carry oil--particularly oil from Saudi Arabia--across Oman to the Arabian Sea is nothing new and has been bandied about for decades. Recently, Oman was thought to be among the prospective bidders for a $17B minority stake in Aramco's gas pipeline assets that were going up for sale.

Romania's state-run (70%) Romgaz said it would buy a 50% stake in Exxon's Neptun Deep offshore gas project in the Black Sea for $1 billion. It is the largest takeover deal signed by a Romanian company. The move comes as the energy crisis in the region has bolstered prices and threatened shortages. Neptun's reserves are estimated between 42 billion cm and 84 billion cm. Exxon and OMV Petrom, who jointly own the asset, have delayed their FID due to recent legislative changes.

UK's Cairn Energy has finalized the sale of two North Sea assets that will further distance itself from Northwest Europe. The move comes after Cairn completed in September its acquisition of Shell's Western Desert assets in Egypt, along with Cheiron Petroleum.

PGNiG Upstream Norway has discovered a 19- to 63-million barrel light oil crude deposit in the Norwegian Sea, in its PL939 license known as the Egyptian Vulture reservoir. PGNiG holds shares in 58 licenses on the NCS.

China has received an emergency LNG shipment from the Russian Arctic as China continues to stare down the barrel of tight energy supplies. The cargo carried 70,000 tons of LNG produced at Yamal LNG and delivered over the Northern Sea Route via a specialized LNG carrier. The shipment was even moved up by four days to keep the Guangdong region from running out of gas. This amount of gas was significant, capable of keeping 1.5 million residents with electricity for a month.

Q3 Earnings

BP raked in $3.3 billion in profits for the quarter, compared to profits of $86 million in Q3 2020. In its quarterly report, BP warned that gas supply would remain tight this winter. Accounting losses of $6.1 billion due to hedging oil and gas prices dogged the company for the quarter. Still, BP announced a $1.25 billion buyback program that will be complete before Q4 figures are released.

Canadian Natural Resources also had a good quarter, surpassing analyst estimates. Producing 1.24 million boepd in Q3 compared to 1.1 million boepd in Q3 2020, the company earned C$1.77 per share.

Bloom Energy Corp. disappointed this week with wider Q3 losses and lower revenue than expected. Net loss came in at $52.4 million (30 cents a share) compared with a loss of $11.9 million in the same quarter last year. Revenue was up at $207.2 million, compared to $200.3 million a year ago, but still well below expectations.

Regulations

President Biden has rolled out new regulations at the UN that will cut methane emissions from oil and gas. The regulations will rely on a monitoring program that would alert companies to leaks and would require that they be fixed. The monitoring would in part, include drones. The regulations would also ban venting. The rules are thought to be stricter than the Obama-era regs.

Norway's Norges Bank said it will hike rates in December amid surging oil prices. Experts are expecting three additional rate hikes next year, largely already priced into the market.