Overthrowing One Of The World's Longest Serving Dictators

Politics, Geopolitics & Conflict

- This may be the end of one of the world’s longest-surviving dictators - the ever-colorful president of Belarus, Aleksandr Lukashenko. Hundreds of thousands of protesters are finally ready to take him down following a presidential election in which Lukashenko was declared the winner with 80% of the vote, making this - if he survives - his sixth term in office. No one was buying the result, and in the protests that ensued (and continue) riot police have been unleashed in full force, beating and arresting thousands, while the opposition candidate, Svetlana Tikhanovskaya, has fled the country in fear. The EU has refused to recognize the results of the election, which means that Lukashenko will now become desperate, and likely more violent, and Russia will do everything it can to ensure that Belarus remains somewhat under its control, even if that means it won’t happen through Lukashenko. Russia will be the kingmaker.

- There is one indication that the U.S. is gaining some sort of upper hand in Iraq now that Mustafa al-Khadimi is in the PM seat. Iraq has now said it will sign an agreement with Chevron for exploration work in southern Iraq’s Nassiriya field (believed to hold around 4.4 billion barrels of crude oil. Four other U.S. energy companies (Honeywell, Baker Hughes, GE, and Stellar) will also be in the U.S.-Iraq energy agreements, totaling around $8 billion (including with Chevron). The end goal, from Washington’s perspective, is to reduce Iraq’s energy dependence on Iran. One of the quid-pro-quos here will be Iraq’s expectations that the U.S. will help it root out Turkish military forces who keep launching incursions into the Iraqi north to launch attacks against the Kurdish PKK, sparking yet another diplomatic row provoked by Ankara.

- In the runup to September, China has chartered tankers for 37 million barrels of U.S. crude oil. If the shipments are completed next month, China is set to fulfill more of its obligations under the U.S./China trade deal. Crude oil shipments from the United States to China were already up on the year in the first half of the year, but well below the levels laid out in the trade deal as the pandemic sapped demand.

COVID Market Update

- Taking their cue from market conditions and other oil and gas giants, Australia’s second-largest gas producer, Santos, has scaled back its H1 dividend amid low oil prices and questionable demand. Still in the works are three projects worth nearly $7 billion, including the development of the Barossa gas field and Dorado oilfield. While it still is planning on moving forward with those projects, Santos will not proceed until market conditions are right.

- The world’s largest offshore rig owner by fleet size, London-based Valaris, is the latest in the industry to file Chapter 11, after Diamond Offshore, Noble, and a smattering of others did the same. Valaris will now restructure a portion of its mountainous debt that totals almost $8 billion, against $13 billion in assets.

French Total SA has halted operations at the 13,000 bpd offshore North Sea oilfield Dan Bravo in another instance of Greenpeace protestors climbing aboard the unmanned rig to get Denmark to ban all new oil and gas exploration.

Deals, Mergers & Acquisitions

Occidental is looking to ditch more assets, this time in Colorado and Utah, to offset its disastrous purchase of Anadarko that left it debt-heavy at the most inopportune time. The assets - totaling about $1.3 million, are a drop in the bucket compared to Oxy’s $36 billion debt load. It is also planning on moving ahead with its earlier plans to dump its assets in Ghana.

Saudi Arabia has officially approved an agreement with Chevron Saudi Arabia in the Saudi/Kuwaiti Neutral Zone. Chevron Saudi Arabia is the operator for Saudi Arabia in the Wafra field, along with Kuwait Gulf Oil Co. Kuwait and Saudi Arabia finally struck a deal to resume production in the Neutral Zone after a long stalemate that halted activity in the area.

Qatar Petroleum has reached a deal with Sonangol and Total SA to acquire a 30% stake in an Angolan ultra-deepwater field, Block 48. The block will be drilled at a record-setting water depth. The farm-in agreement between QP and Sonangol and Total SA will need to be approved by Angola. Total, with a 40% stake, will be the operator.

Asian oversupply of LNG is causing trade flows to be disrupted. Australia has shipped its very first LNG cargo to Chile. The cargo came from Shell’s QCLNG plant, which normally goes to China and Japan. But the oversupply has caused QCLNG to find more homes for its product. Shell, back in June, considered selling its $2 billion stake in the project.

Regulations and Legislation

Argentina has given the go-ahead for state-run oil producer and refiner YPF to hike diesel and gasoline prices for the first time in nine months in what some analysts suggest will rekindle oil production in the country, potentially staving off fuel shortages. Fuel prices in Argentina have been under control for the last 12 months as part of a drive to rein in out-of-control inflation.

E*Trade Securities, one of the largest U.S. brokerages, was slapped with a class-action lawsuit for allegedly failing to disclose proper risks to clients that were burnt by the negative WTI Crude oil prices in April.

ExxonMobil has new cause to be concerned in Guyana, with the new government increasing local content laws that could cause further delays for the development of the Stabroek Block (Exxon, Hess, CNOOC). First production from the block started in January, and Exxon was producing 98,000 bpd by the end of July, with plans for 120,000 bpd by the end of August. Local content rules govern the processes involved in the training and hiring of foreign workers and the acquisition of locally made goods/equipment. What exactly the new local content rules will mean for Exxon remains unclear at this point.