Politics, Geopolitics & Conflict
The latest from Moscow comes in the form of hints dropped by Kremlin spokesperson Dmitry Peskov to the effect that Putin could potentially opt to not hold presidential elections next March. Peskov’s reasoning is that an election would be irrelevant because Putin would so clearly win. “Our presidential election is not really a democracy, it is costly bureaucracy... Mr. Putin will be re-elected next year with more than 90% of the vote,” Peskov told NYT (later claiming he was misquoted). In the run-up to the invasion of Ukraine, Putin saw to it that the constitution was changed to allow him to run for president again and remain president until 2036 (a tried and true mechanism in countries in the Central Asian region). Since then, he has outlawed mass protests and either jailed or forced into exile real opposition leaders.
In Ukraine, the running theory is that Kyiv is attempting to disrupt Russian oil exports through the Black Sea as part of its latest counteroffensive. A Ukrainian attack last week on a Russian vessel in Novorossiysk Bay suggests that Russia’s oil export infrastructure is being targeted in a new twist in this conflict. Ukraine attacked the vessel with naval drones. A second attack shortly afterward targeted a Russian oil tanker near the Crimean Bridge. Finally, Kyiv has declared six Russian Black Sea ports “military threat zones”. While these attacks so far have not registered with the markets, any further, clear…
Politics, Geopolitics & Conflict
The latest from Moscow comes in the form of hints dropped by Kremlin spokesperson Dmitry Peskov to the effect that Putin could potentially opt to not hold presidential elections next March. Peskov’s reasoning is that an election would be irrelevant because Putin would so clearly win. “Our presidential election is not really a democracy, it is costly bureaucracy... Mr. Putin will be re-elected next year with more than 90% of the vote,” Peskov told NYT (later claiming he was misquoted). In the run-up to the invasion of Ukraine, Putin saw to it that the constitution was changed to allow him to run for president again and remain president until 2036 (a tried and true mechanism in countries in the Central Asian region). Since then, he has outlawed mass protests and either jailed or forced into exile real opposition leaders.
In Ukraine, the running theory is that Kyiv is attempting to disrupt Russian oil exports through the Black Sea as part of its latest counteroffensive. A Ukrainian attack last week on a Russian vessel in Novorossiysk Bay suggests that Russia’s oil export infrastructure is being targeted in a new twist in this conflict. Ukraine attacked the vessel with naval drones. A second attack shortly afterward targeted a Russian oil tanker near the Crimean Bridge. Finally, Kyiv has declared six Russian Black Sea ports “military threat zones”. While these attacks so far have not registered with the markets, any further, clear indications that Russian oil exports are under threat could send oil prices higher. Russia ships up to 600,000 bpd of crude through the Black Sea ports.
The standoff following a coup in Niger continues, with mediation efforts failing and the junta threatening to kill the country’s deposed president if there is any external military intervention to overthrow the coup leaders. This threat comes after ECOWAS–a West African regional economic/military bloc–said its forces were on standby to deploy to Niger. This conflict could easily spill across fragile borders and threaten a much wider conflict.
Earnings Snapshots
Nat gas company Tellurian (NYSE: TELL) failed to live up to analyst expectations, reporting a Q2 EPS of $-0.110. Revenue also underperformed, with Q2 revenues of $31.9 million, vs an estimate of $52.75 million. The company produced 17.2 bcf of nat gas during the quarter, up from 9 bcf in the same quarter last year. Meanwhile, Tellurian’s deal with trading house Gunvor over the Driftwood LNG project has been terminated, leaving the fate of the project up in the air. The two parties had reached a 10-year deal two years ago for the delivery of 3 million metric tons/year of LNG.
Siemens Energy is now expected to post a net loss of 4.5 billion euros this year, after finding that its wind turbine unit will cost it 2.2 billion euros. Siemens cut its sales outlook and profit expectations as well. The projects with the wind turbine unit come after the discovery of wrinkles in rotor blades and faulty gears at some of its turbines.
Cheniere Energy beat analyst expectations for Q2 2023 earnings, with EPS of $0.84. Cheniere’s total revenues of $1.933 billion were below the Q2 2022 level of $4.181 billion and missed analyst estimates. Earnings were up on the declining cost of sales $604 million vs. $3.2 billion in the same quarter last year), but tempered by lower LNG volumes loaded.
Saudi Aramco reported a $29.4 billion payout to investors for Q2–up nearly $10 billion from Q1. The increased payout–most of which goes to the Saudi government, will wipe out the Kingdom’s budget deficit it was on track for this year. Aramco reported $30 billion in Q2 profits, which was down nearly 40% from the same quarter last year. Aramco’s total sales were $106 billion for the quarter, down from $150 billion in Q2 2022.
Deals
Phillips 66 and Archer-Daniels-Midland are discussing a biofuels JV to produce low-carbon jet fuel. The project would convert grain-based alcohol into jet fuel.
ConocoPhillips is planning to raise funds by issuing notes to help it acquire the last 50% of the Surmont oil facility in Canada. The stake is estimated to be worth $3 billion. Conoco has plans to snap up the second 50% stake from TotalEnergies sometime in the second half of this year.
ADNOC Gas has awarded a $3.6 billion contract to National Petroleum Construction Company PJSC and Spain’s Tecnicas Runidas to expand its gas processing infrastructure in the UAE.
Discovery & Development
Equinor has received approval from Norway to continue its Snohvit gas and condensate field, and its Hammerfest LNG plant. The approval allows Equinor to electrify the plant starting in 2030 and includes onshore compression from 2028. Hammerfest liquefies the nat gas from Snohvit. The electrification of the plant was originally supposed to start in 2028, but the government pushed it back.
Saudi Aramco’s CEO reiterated that it was going ahead with the Durra gas field that is shared with Kuwait despite Iran’s objections. The Kuwaiti Deputy Prime Minister said that the project would not wait for a demarcation deal with Iran.
Marvel Fusion is disgruntled with the lack of support in Europe and is building a laser fusion facility in the United States through a $150 million JV. Marvel referenced the “clear milestone-based funding programmes as well as a regulatory framework with a clear planning horizon,” as part of its reason for choosing the US, as the Biden Administration still seeks to woo clean energy projects from overseas.
Russia and Korea are going to build two nuclear power stations in Uganda capable of generating 15,600 MW of power, but Uganda has failed to provide a timeline for the projects, or speak to the funding. Uganda’s current power generation capacity is 1402MW, but much of Uganda has struggled with power fluctuations on a near-constant basis. Uganda has limited funds to build a nuclear power facility.
