Geopolitics
- In an unexpected turn of events indicative of the United States loss of power in Iraq, an Iraqi court has issued an arrest warrant for Trump in connection with the assassination last year in Iraq of Iranian General Qassim Soleimani and Iraqi militia leader Abu Mahdi al-Muhandis, the head of a group created to fight ISIS. The warrant is for charges of premeditated murder and is, of course, not expected to be carried out but to carry specific symbolism.
- In Libya, the October-agreed ceasefire still holds, though mercenaries have not been withdrawn from the Sirte flashpoint (no one trusts anyone enough to lose position here). The first hiccup with exports came earlier this week when Petroleum Facilities Guards (PFG) blockaded the Hariga port over unpaid wages. The blockade was lifted by January 7th, but temporarily caused a drop in the Libyan dinar, which had gained some positive ground over a long-awaited Central Bank move towards a single official exchange rate.
- A South Korean oil tanker has become cannon fodder in the cat and mouse game between Iran and the United States. Earlier this week, Iran seized a South Korean tanker for alleged pollution, while observers are speculating that the move was retaliation for South Korea’s role in freezing Tehran’s access to $7 billion held in South Korean banks due to U.S. sanctions. At the same time, Iran is demanding, tongue-in-cheek, that the U.S. pay $70 billion in damages for lost oil revenue from…
Geopolitics
- In an unexpected turn of events indicative of the United States loss of power in Iraq, an Iraqi court has issued an arrest warrant for Trump in connection with the assassination last year in Iraq of Iranian General Qassim Soleimani and Iraqi militia leader Abu Mahdi al-Muhandis, the head of a group created to fight ISIS. The warrant is for charges of premeditated murder and is, of course, not expected to be carried out but to carry specific symbolism.
- In Libya, the October-agreed ceasefire still holds, though mercenaries have not been withdrawn from the Sirte flashpoint (no one trusts anyone enough to lose position here). The first hiccup with exports came earlier this week when Petroleum Facilities Guards (PFG) blockaded the Hariga port over unpaid wages. The blockade was lifted by January 7th, but temporarily caused a drop in the Libyan dinar, which had gained some positive ground over a long-awaited Central Bank move towards a single official exchange rate.
- A South Korean oil tanker has become cannon fodder in the cat and mouse game between Iran and the United States. Earlier this week, Iran seized a South Korean tanker for alleged pollution, while observers are speculating that the move was retaliation for South Korea’s role in freezing Tehran’s access to $7 billion held in South Korean banks due to U.S. sanctions. At the same time, Iran is demanding, tongue-in-cheek, that the U.S. pay $70 billion in damages for lost oil revenue from sanctions--an amount Tehran is suggesting would be the cost of considering a return to any potential Biden-fostered nuclear deal.
Deals, Mergers & Acquisitions
- Eni’s sale of $1 billion in Australian assets is now on hold after the offers that came in were significantly below what the Italian energy giant had hoped for. Eni was hoping to rid itself of its Australian assets as it tries to ditch its non-core holdings to drum up cash--and as perhaps an afterthought, as it tries to shift toward a greener business model.
- French Total SA has signed an exploration and production agreement with the Egyptian Natural Gas Holding Company for an offshore block in Egypt’s Herodotus basin. Total holds 35% operated interest, Shell holds a 30% stake, KUFPEC holds a 25% stake, and Tharwa holds 10%.
- Oil trader Trafigura received a $7 billion loan from a Russian bank for its purchase of a 10% stake in Rosneft’s Arctic oil project, Vostok Oil. It is the trading house’s largest-ever deal. Trafigura and Rosneft announced the deal a week ago but did not disclose the financing details or the value of the deal. Trafigura apparently kicked in a small amount of its own funds as well, making the total deal valued at more than $7 billion. This also means that the total Vostok Oil project is valued north of $70 billion--more than Rosneft’s market cap.
Discovery & Development
- Kuwait has announced three separate oil and gas discoveries this week. The first, in the Homah oilfield, is a light oil discovery with a flow rate of 1,452 barrels per day. This was in an undiscovered area. The second find is the al-Qashaniyah field, with a flow rate of 1,819 bpd of light oil and 2.78 MMcf/d of associated gas. The third was north of the giant Burgan field at a rate of 2,000 bpd.
- Brazil will hold an auction for 92 offshore blocks in October 2021 after the move was approved by the country’s National Energy Policy Council (CNPE). This will be the country’s 17th bidding round, which had been delayed due to the COVID-19 pandemic. The blocks are located in the Potiguar, Campos, Santos, and Pelotas sedimentary basins and cover nearly 54,000 square kilometers. Some of these blocks will be eyed for their lucrative subsalt potential.
Regulations & Legislation
- A U.S. judge has quashed environmental opposition to President Trump’s plan to sell drilling rights in the Arctic National Wildlife Refuge. However, the sale was lackluster, attracting three bids--one of which was Alaska’s state-owned economic development corporation, who was the only bidder on nine parcels. The total lease proceeds reached just $14.4 million, most of which came from Alaska.
- Malaysia has declared force majeure on two oil terminals after an accident and a technical malfunction. For Petronas’ Baram facilities, it may take until the third quarter of 2021 before it reaches full output again.
Renewables
- Tesla (NASDAQ:TSLA) topped $800 Thursday, with Musk surpassing Bezos in wealth, as a “blue wave” emerges, lending more impetus to a major push for renewable energy beginning this year. Tesla was rumored this week to be building a new 206,000 sq ft building in Seattle.
- At the same time, new data shows that EVs trounced 2020, even if they’re still far from overtaking ICE vehicles. Some notable takeaways include: 1) EVs made up 54% of all new car sales in Norway in 2020; 2) EV’s in Spain rose 64% in 2020. 3) Germany also sold 3 times more BEVs in 2020 than it did in 2019. 4) Chevy Volt EV sales doubled in Q4 2020. 5) Tesla’s EV sales increased by over 35% in 2020. 6) France hit a record 19.2% in EV sales in December. 7) The U.S. EV market is expected to see a 50% uptick in sales in 2021, while EV makers may be able to get their hands on some California stimulus money as part of a $1.5 billion proposed package to incentivize businesses and consumers to switch to EVs.
- Egypt will offer an incentive to vehicle owners to convert their ICE vehicles to a dual-fuel engine model. Under the plan, the Central Bank of Egypt will make 15 billion pounds available to banks to loan out to car owners to make the conversion. The program would be sufficient for converting 80,000 cars.
