ISIS Attacks An Israeli-Egyptian Pipeline

Politics, Geopolitics & Conflict

Keep a close eye on Libya - and particularly on Sirte (the gateway to Libyan oil) following the November 3rd agreement for a permanent ceasefire. There are still multiple vying militias and mercenary groups in Sirte, digging in for a tense situation.

French Total SA is already trying to take advantage of the ceasefire--before the dust has settled--launching talks with officials to increase investment with the Libyan National Oil Company. Libyan production is now at 1.25 million bpd.

A portion of an Israeli-Egyptian gas pipeline exploded Thursday in an attack claimed by ISIS. The pipeline is an obvious target for ISIS, if claims prove true, as it represents a complete reshaping of geopolitical dynamics and alliances in the Middle East and is a direct blow to the ISIS cause, threatening its longevity and reason for existence. Local authorities are saying that there is no lasting damage and gas flows have not been interrupted.

Deals, Mergers & Acquisitions

Saudi Aramco moved to raise $8 billion dollars this week, as it struggles to pay out its generous $37.8 billion dividend to the Kingdom of Saudi Arabia in H2 while simultaneously coming up with $70 billion for its SABIC purchase. The oil giant’s finances have been hurt by faltering oil prices and the production cut deal that has eaten further into revenue. Aramco had a 44% dropoff in profits in Q3.

Unconfirmed sources say that a deal could close in the coming days for the sale of a 26.25% stake in Royal Dutch Shell’s Queensland Curtis LNG project in Australia. Earlier news had Shell considering this sale for $3 billion.

The Gulf of Mexico’s November 18 auction saw oil and gas companies enter 105 bids totaling $135 million for exploration leases. Royal Dutch Shell PLC bid the most overall, followed by Equinor.

In Suriname, state-run Staatsolie has invited bids for exploration rights in 8 offshore shallow-water blocks, hoping that Apache/Total’s wild discovery successes in deeper offshore waters will attract bigger investment on the shallow end, which Staatsolie has been heavily involved in itself.

Discovery & Development

Very little going on in the oil and gas development scene this week, other than a steady Libyan uptick and hurricanes taking their toll on Gulf of Mexico production. However, after a series of stunning hits offshore Guyana, Exxon now says that it’s Tanager-1 well in the Kaieteur block does not appear to be financially viable on its own, though the news is not likely to put any damper on the excitement over the 18 massive discoveries in the huge Stabroek block (a total of 8 billion barrels of recoverable oil and gas).

Regulations and Legislation

The Trump Administration is making an 11th-hour push to sell oil leases in the ANWR region in Alaska before Biden gets into office. Over the next few days, the administration will seek feedback from oil companies on what areas should go up for sale. Then we wait 60 days. Alaska’s oil production has dropped off considerably over the last few decades, from 2 million to now just 500,000 bpd, as the ecologically sensitive areas draws pushback from environmentalists, despite local support for the revenue and jobs extra oil production would bring. On Thursday, the administration moved to lessen the restrictions around Arctic drilling to “remove unnecessary, burdensome provisions” that were included in the Obama-era rules.

Chevron has received a longer reprieve to continue doing business in sanctioned Venezuela (along with Halliburton, Schlumberger, and Baker Hughes). Chevron, currently operating in Venezuela under a waiver that only runs through the end of November, no doubt has been anxious over the fate of its operations in Venezuela, where any abandoned assets, even if temporarily, would be considered forfeited and seized by Venezuela. The new extension gives the remaining oil companies in the South American country until June to wrap up their operations there.

After coming up dry in the Trinity-1X exploration well offshore Romania in the Black Sea in Q1 this year, Russian Lukoil is now said to be in talks to sell its majority share in the Trident block.

Almost immediately after the Supreme Court heard an appeal over Arctic permitting, Norway is offering up licenses to explore its far north. Eight of the nine areas being offered reside in the Barents Sea, with one in the Norwegian Sea. The total number of blocks up for grabs is 136. The Barents Sea is Norway’s ticket for maintaining its level of oil product, with more than half of its undiscovered resources here--with half of that being off-limits. The Supreme Court’s decision on the appeal is expected sometime after the first of the year.

Renewables

Britain will ban the sale of new ICE vehicles by 2030--shortening its goal by a decade. Hybrid vehicles will still be able to be sold through 2035. Automakers are viewing the new targets as overly ambitious.

Denmark’s Copenhagen Infrastructure Partners and Hydrogen Renewables Australia will develop Western Australia’s flagship 5 GW Murchison Renewable Hydrogen Project, as the down under country strives to become the global leader in hydrogen--one of the hottest new investment spaces out there. The project will use PV and wind to produce ‘green’ hydrogen fuel for export to Asia.

GM will increase its spending to $27 billion (up from $20 billion) to ensure that it can manufacture 40% of its cars as electric vehicles by 2025.