Media Reports Exaggerate the Risk of a Major War

Politics, Geopolitics & Conflict

In northern Iraq, an Iranian missile this week targeted what Tehran claimed to be an Israeli spy center in Erbil, the capital of Iraqi Kurdistan. More than half a dozen explosions resulted in the death of at least four people in residential areas. The nature of the attack sparked condemnation from Baghdad, which recalled its ambassador to Tehran.

We won’t spend too much time on the German tabloid report on the imminent war between NATO and Russia. Bild, the German tabloid, has (as intended) started a viral rumor that Russia is planning to invade Europe by targeting NATO’s weak spot in a corridor connecting Belarus with the Russian exclave of Kaliningrad. The Bild report is sparking a frenzy of war fear by citing a leaked document from the German Defense Ministry. While the document is simply a military training scenario, of which there are many, the story has been spun and respun as direct evidence that Russia is planning to launch this war as early as February by deploying more troops to Belarus and Kaliningrad. This is a brazen manipulation of the media and a brazen misrepresentation of the documentation used in citing.

The Russian military intercepted a drone over St. Petersburg on Monday night, forcing the Pulkovo International Airport to ground flights as a precaution (only briefly), according to The Moscow Times. This is the first time St. Petersburg has been targeted by a presumably Ukrainian drone since Russia’s invasion. The drone appeared to be targeting the St. Petersburg Oil Terminal. Ukrainian sources claim responsibility for the drone, the intention of which was to send a message to Moscow that Ukrainian weapons are now capable of reaching as far as St. Petersburg. Drones were also intercepted in Podolsk (south of Moscow) and in the Belgorod region.

Presidential elections in Taiwan this week saw victory for Vice President Lai Ching-te of the Progressive Party (DPP), though no party won an outright majority, promising a fragmented government. China policy is of key interest here, but we feel mainstream media is overexaggerating the potential consequences of the election outcome. While China would have liked to see the DPP out of the presidency finally, this development is not, as mainstream media would have us believe, the precursor to an all-out war. The point for Beijing is not necessarily to win control over Taiwan through the election of the right president; rather, it is simply to ensure that it does not move too far in the other direction. Lai Ching-te’s victory is simply status quo.

Discovery & Development

Eni and Chevron made a new gas discovery from the Nargis-1 well in the offshore Nargis concession. Chevron is operator with 45% interest, with Egypt’s Tharwa Petroleum holding a 10% interest. Eni holds the remainder. The new discovery is located next to some of Eni’s existing facilities. Egypt currently imports some gas from Israel even as its giant Zohr field came online last year due to the country’s growing demand.

A court in Norway invalidated three permits it had granted for the development of offshore oil and gas fields because the environmental impact wasn’t properly considered. The lawsuit was originally filed by Greenpeace and Nature and Youth. The three permits include Equinor’s Breidablikk field and Aker BP’s Yggdrasil and Tyrving fields. Combined they hold 875 million boe.

Deals, Mergers & Acquisitions

Talos Energy will acquire QuarterNorth Energy–a privately held GoM E&P company for $1.29B. The deal will see QuarterNorth receive 24.8 million of Talos stock and $965 million in cash. Talos will acquire 30,000 boepd of new production for 2024 and 69 MMBoe in proved reserves. It is also expecting its base decline rate to improve by 20%, which it hopes will reduce its required investment next year.
Sweden’s Maha Energy acquired 5% of Brazil’s 3R Petroleum and proposed a carve-out of its onshore oil assets, which would be combined with another company, PetroReconcavo. The combined company will have an output of 80,000 boepd in 2024. The two companies signed an MOU in 2022 to explore the opportunities to share facilities and resources.

The European Commission has approved the acquisition of Germany’s Quadra Energy by TotalEnergies after determining that the deal would not raise competition concerns.