Politics, Geopolitics & Conflict
Over the past year, the signs have been everywhere that Middle East alliances are truly shifting, and the very tricky game of normalization of ties with Israel is happening on multiple fronts. First and foremost, this is because Israel’s major natural gas discoveries and first-time production have given it much more regional clout, and plenty of soft-power leverage over neighbors, particularly those who need gas. Setting the stage in 2020, we saw the UAE normalize ties with Israel, followed by a series of energy deals. The Saudis have not jumped on this slow-moving train, first re-establishing ties earlier this year with arch-enemy Iran, which is also Israel’s arch-enemy. This week, Saudi Arabia and Iran formally finalized rapprochement by installing their respective ambassadors in Riyadh and Tehran, while the Biden administration reversed a Trump-era move to grant Israel the Golan Heights. Likewise, as we noted last week, Washington’s schemes to get Libya to normalize with Israel have led to dangerous protests and the fleeing of the country’s foreign minister (the scapegoat); yet, it has more recently emerged that PM Dbeibah has also met with Israel’s Mossad chief in Jordan, with normalization on the secret agenda. The big question now is, what will normalization between Saudi Arabia and Israel cost? Saudi Arabia wants a new security deal with the U.S., while Palestinian Authorities want hundreds of millions of dollars and more control…
Politics, Geopolitics & Conflict
Over the past year, the signs have been everywhere that Middle East alliances are truly shifting, and the very tricky game of normalization of ties with Israel is happening on multiple fronts. First and foremost, this is because Israel’s major natural gas discoveries and first-time production have given it much more regional clout, and plenty of soft-power leverage over neighbors, particularly those who need gas. Setting the stage in 2020, we saw the UAE normalize ties with Israel, followed by a series of energy deals. The Saudis have not jumped on this slow-moving train, first re-establishing ties earlier this year with arch-enemy Iran, which is also Israel’s arch-enemy. This week, Saudi Arabia and Iran formally finalized rapprochement by installing their respective ambassadors in Riyadh and Tehran, while the Biden administration reversed a Trump-era move to grant Israel the Golan Heights. Likewise, as we noted last week, Washington’s schemes to get Libya to normalize with Israel have led to dangerous protests and the fleeing of the country’s foreign minister (the scapegoat); yet, it has more recently emerged that PM Dbeibah has also met with Israel’s Mossad chief in Jordan, with normalization on the secret agenda. The big question now is, what will normalization between Saudi Arabia and Israel cost? Saudi Arabia wants a new security deal with the U.S., while Palestinian Authorities want hundreds of millions of dollars and more control of land in the West Bank. This will be one to watch in the coming weeks.
The Biden administration this week canceled all seven oil and gas leases (all that remained) in the Arctic National Wildlife Refuge, Alaska. The leases were granted under Trump. This is being viewed as a nod to critics of Biden’s earlier move to approve the Willow oil project (ConocoPhillips Alaska) on the North Slope. Alaska’s Republican government has threatened to sue the administration over the cancellation on Wednesday of the Arctic leases.
Deals, Mergers & Acquisitions
Eni is gearing up to sell its Nigerian E&P subsidiary, Nigerian Agip Oil Company (NAOC), to Nigeria’s Oando. NAOC currently holds stakes in two onshore exploration leases, four onshore blocks, and two power plants. The deal won’t include NAOC’s stake in Shell’s PDC JV, which will stay with Eni. That leaves Eni with its Nigerian Agip Exploration and Agip Energy and Natural Resources ventures in Nigeria, which focus mainly on offshore projects. The deal is still subject to regulatory approval. NNPC Ltd said that Eni did not obtain its permission before announcing the deal in what some say could be seen as a breach of terms.
Shell and Trinidad and Tobago’s National Gas Company could agree to credit PDVSA for its $1B investment in an offshore gasfield that the trio intends to develop, reviving the Dragon project, which had been put on the back burner as the U.S. prohibited PDVSA from receiving cash payments from the project. The group received authorization earlier this year to revive the project, but the Biden Administration has been asked to reconsider the payments to Venezuela.
ORLEN Group’s subsidiary PGNiG Upstream Norway signed a letter of intent with Horisont Energi to join the operations of the Polaris carbon storage project in the Norwegian Barents Sea, with PGNiG Upstream Norway serving as operator with a 50% stake. The deal should be complete by December. This is ORLEN’s first Co2 storage license.
Diamondback Energy’s subsidiary Viper Energy Partners agreed to acquire mineral and royalty interests from affiliates of Warwick Capital Partners and GRP Energy Capital in a billion-dollar deal. The deal expands VIper’s already-strong Permian presence and will bring its expected full-year production to 8,500 boepd by next year.
Chevron snapped up 77 acres in Cypress, Texas, just outside Houston, in what some think is a new R&D campus. Chevron said its existing California headquarters and Houston office complex will remain.
Daimler, Paccar, China’s EVE Energy, and Cummins will team up to build a lithium-iron-phosphate battery plant for trucks. Cummins, Diamler, and Paccar will invest between $2B-$3B in the JV factory, with all three firms owning a 30% stake. The Chinese company, Eve Energy, will hold a 10% stake. The factory is expected to start making batteries in 2027.
Lukoil’s trading unit, Litasco SA, is starting an operation in Mexico as the company struggles to find buyers for its products in the wake of sanctions. Oil products trader Yuri Carreno has been hired to head up the operations. The move could see some of Mexico’s US oil products imports swing to Russian-sourced products.
