Israel-Hamas Peace Talks Fall Apart

Politics, Geopolitics & Conflict

In the Middle East, this week’s peace talks saw Hamas agree to proposals for a ceasefire laid out by Egypt and Qatar, but Israel proceeded with its incursion into Rafah (southern Gaza), ordering a full-scale invasion. That took peace talks off the table again and came with a warning from the Biden administration that the U.S. would pause bomb shipments to Israel over civilian deaths. On Thursday, Netanyahu responded by saying Israel could “stand alone”.

Last week, Turkey cut off its $9+-billion annual trade with Israel over the war in Gaza, and this week, it eased some sanctions, though Ankara was careful to deny there was any actual easing. After Ankara said it would offer a three-month reprieve for companies with existing export deals to Israel, Tel Aviv described it as an easing of restrictions from Erdogan, which Ankara denied. Erdogan will not want to be seen retreating here, but the reality is that breaking off trade relations with Israel is not beneficial to Turkey, but it is arguably more harmful to Israel. Last year, Turkey and Israel did $6.8 billion in trade (Turkish data). Israel is Turkey’s 13th biggest trade partner, while Turkey is Israel’s 5th biggest trade partner. The ban will remain in place until Israel agrees to a ceasefire and allows humanitarian aid to pass through to Gaza. Azerbaijani oil, which travels through Turkey on its way to Israel, is exempted from the ban. Overall, the ban is Erdogan's response to public pressure/expectations, but the reality is that Erdogan had no choice, and in combination with a disastrous earthquake and soaring inflation, he suffered major losses in recent local elections because of his lack of any measures against Israel’s aggressive operations in Gaza. 

Discovery & Development

TotalEnergies achieved first oil for its Eldfisk North Project in Norway's Greater Ekofisk Area, marking a milestone in the region's energy sector. The project, located in PL018, involves collaboration between TotalEnergies EP Norge AS, ConocoPhillips Skandinavia AS, Vår Energi ASA, Sval Energi AS, and Petoro AS. The project is expected to produce 15,000 boepd utilizing existing infrastructure.

In other Norway news, The Norwegian Ministry of Energy has announced the APA 2024 licensing round on the Norwegian Continental Shelf, expanding the acreage by 37 exploration blocks in the Barents Sea and the Norwegian Sea. This move aims to facilitate the exploration of known geological areas and maintain activity and production in the Norwegian oil and gas industry. The deadline to apply for APA 2024 is September 3, 2024, with production licenses expected to be awarded in early 2025.

Talos Energy is set to commence drilling the Katmai West #2 well in the US GoM Green Canyon region, following its acquisition of QuarterNorth Energy. This move aims to further appraise the Katami discovery, potentially adding significant reserves to Talos' portfolio. Additionally, Talos plans to drill the Daenerys exploration well, evaluating the Miocene section in the GoM, with a gross unrisked recoverable resource potential between 100 – 300 MMBoe. With a focus on increasing production and reserves, Talos Energy continues to advance its drilling program and expand its presence in the U.S. offshore sector.

Deals, Mergers & Acquisitions

Equinor (EQNR.OL) has acquired a 45% stake in lithium projects in Southwest Arkansas and East Texas through an agreement with Standard Lithium Limited. The deal involves an initial payment of $30 million to Standard Lithium and covers project expenses up to $33 million. Equinor may pay an additional $70 million in milestones if an FID is made. This move aligns with Equinor's focus on sustainable lithium production and supports its entry into the lithium market while leveraging environmentally friendly extraction technologies.

Shell has agreed to sell its Bukom refinery in Singapore to a JV comprising Indonesian chemicals firm PT Chandra Asri and Glencore, marking a significant move in CEO Wael Sawan's plan to reduce the company's carbon footprint. The sale of this "crown jewel" refinery aligns with Shell's strategic focus on its most profitable businesses. Chandra Asri and Glencore, the majority owners of the joint venture CAPGC Pte. Ltd., are set to acquire a complex with several crude distillation units and a steam cracker, pending regulatory approval. This transaction underscores Shell's commitment to reshaping its portfolio in line with evolving energy transition dynamics.

Santos and Repsol are exploring the sale of minority stakes in their jointly owned and developed oilfields in Alaska, a deal that could potentially reach around $1B. The oilfields include the significant Pikka project, valued at around $4.5B. The companies are collaborating with an investment bank to facilitate the sale of minority stakes in Pikka, as well as partial interests in the Horseshoe and Quokka fields in Alaska's North Slope region. These stakes are non-operating positions. Potential buyer interest may be dampened by environmental risks associated with North Slope projects.

Trafigura's recent agreement to acquire more of UK-based biodiesel firm Greenergy marks a significant move in the renewable energy sector. This expansion comes shortly after Trafigura's announcement of plans to acquire Greenergy's European business. Trafigura's move reflects the broader trend among major commodities traders, who are diversifying their investments across various renewable energy technologies, including hydrogen, ammonia, geothermal, biomethane, and solar. 

Azule Energy and Rhino Resources Namibia have entered into a partnership in Namibia's Orange Basin, marked by a farm-in agreement granting Azule a 42.5% interest in Block 2914A offshore. This collaboration aims to accelerate exploration in the region, with plans to drill two high-impact exploration wells by the end of 2024. 

Energy Earnings

Duke Energy (DUK) reported Q1 earnings of $1.44 per share, surpassing analyst estimates. This marks an improvement from earnings of $1.20 per share in the same quarter last year. Revenues for the quarter were $7.67B, slightly missing analyst estimates. 

Energy Transfer LP’s adjusted EBITDA was $3.9B in Q1, up from $3.4B in the same quarter last year. EBITDA in the crude oil segment was $848 million–up from $526 million in Q1 2023.