The Oil Tanker Captains Facing U.S. Sanctions

Politics, Geopolitics & Conflict

The United States has now added more names to its sanctions list for Venezuela-related transgressions. Five oil tanker captains--all Iranian nationals--who brought 1.5 million barrels of Iranian gasoline and supplies to Venezuela earlier this year have been added. The sanctions not only block any US assets the captains may have, but they also bar any US persons from any dealings with them. These are just the latest in a string of related sanctions on Venezuela in an attempt to oust Maduro.

Shell has begun to evacuate its staff from its 225.000 bpd Bonga FPSO in Nigeria after a number of workers were diagnosed with Covid-19. Bonga FPSO had already been partially shuttered for maintenance.

Iraq’s parliament has approved a $5-billion loan from abroad to tide it over during the oil price crash. OPEC’s #2 producer has been hit particularly hard by the effects of the pandemic and resulting oil price crash, not least because of its political turmoil. The loan will be used in part to pay government salaries in this fragile rentier country.

The Trump administration has released its final plan to expand oil drilling in the Arctic Reserve of Alaska. The plan calls for 18.6 million acres of the 23 million acres in the reserve to be leased for oil and gas exploration. The plan would overturn protections that have been afforded to the sensitive area, although the Obama administration’s plan allowed development in half of the reserve. The move is part of a broader push from the Trump administration to bolster oil production in the United States to increase energy independence. The plan could increase US crude oil production by 500,000 bpd for up to 20 years.

The UN has said that an oil tanker idling off the coast of Yemen with 1 million barrels of crude is taking on water into the engine compartment and is at risk of sinking. Houthi rebels have denied the UN access to inspect the vessel, which has idled without repairs for five years.

ESG Megatrend Developments

It is apparently the season for oil company lawsuits, with both Minnesota and D.C. suing Exxon and a handful of other oil giants for a litany of climate-related issues, including knowing the impact that oil had on the climate and suppressing it. These lawsuits are not the first of their kind, but signal a growing concern as oil companies are short on cash.

Eni has acquired 100% of the shares in three wind farms, CDBG Enrico, CDBG Laerte, and Wind Park Laterza. Combined, the farms have an installed capacity of 35.2 MW and can produce 81 GWh annually, enough to offset 33,400 tonnes of Co2 emissions each year.

The divestment craze is now targeting Liberty Mutual, with state legislators in Massachusetts asking the insurance giant to stop investing in fossil fuel projects. What’s more, the legislators are also asking Liberty to stop providing coverage for fossil fuel projects.

S&P Global Platts has projected that fossil fuels will account for only 50% of the energy supply by 2050 if the world takes steps to meet the 2c warming target laid out by the Paris Agreement. Currently, fossil fuels’ share of the energy mix is about 77%.

The IEA is warning that the EU is suffering the largest decline in nuclear reactors of the advanced economies, possibly tanking the bloc’s share of nuclear energy supplied electricity to just 5% by 2040, compared to 25% today. This is due to the EU’s 126 aging fleet of reactors, most of which have a lifespan of 35 years, were built in the ‘70s and ‘80s. After this, the pace at which new nuclear reactors were constructed has slowed considerably. 89 of the 126 are now in a decommissioning phase.

Deals, Divestments, M&A

UAE’s state-run ADNOC has struck a $20-billion deal with six global firms in what will surely be 2020’s largest energy infrastructure deal in the world. Under the deal, ADNOC has formed a new subsidiary, ADNOC Gas Pipeline Assets, which will have lease rights to 38 pipelines. The six-companies will hold a combined 49% stake in the new subsidiary, leaving ADNOC with the rest. ADNOC will retain ownership of the pipelines. The project will bring more than $10 billion in direct investments to the UAE. The six companies are Brookfield Asset Management, GIC (Singapore’s sovereign wealth fund), Global Infrastructure Partners, NH Investment & Securities, Ontario Teachers’ Pension Plan Board, and Snam.

After two decades, with four exploration licenses and 8 development and production leases, Italian giant Eni is now exploring an exit from Pakistan, where it is considering divesting producing assets in Bhit, Badhra and Kadanwari, as well as processing facilities and non-operating assets.

Occidental Petroleum is looking for bids for its properties in Wyoming and Colorado by July 1 as part of its divestment campaign after it amassed nearly $40 billion in debt from its Anadarko Petroleum acquisition. Occidental is the largest private landowner in Wyoming thanks to its holdings in the Powder River Basin. Potentially millions of acres are up for grabs in what could fetch the oil company as much as $700 million. In separate news, Occidental said this week that it would take $9 billion in impairment charges for Q2 related to its assets as oil prices are expected to remain low.

Discovery & Development

After resolving the question about how far north oil companies can drill, Norway is planning to auction off as many as 136 new oil and gas exploration blocks, 125 of which are located in the Arctic Barents Sea off Norway’s coast. Norway’s 25th licensing round is an attempt to woo back oil majors who have stopped exploring off its coast because many prospects have come up dry or have been lackluster. The Barents Sea is still thought to hold a significant amount of oil despite some disappointing recent history.

BP Oman is preparing to launch its Ghazeer field project, which is--at the time of writing--99% complete. The gas project will produce 500 mmcf. Overall, BP, which has invested over $9 billion out of its targeted $16 billion, is eyeing production of 10.5 trillion cubic feet from renewable gas resources at the Khazzan and Ghazeer projects in Oman. This update comes only a couple weeks after it was confirmed that BP was in early-stage talks to divest around a 10% stake (it holds 60%) in Khazzan for an estimated $1 billion.

Kazakhstan’s state oil company KazMunayGas has found oil during a geological exploration in the Bekturly Vostochny exploration block in the western region of the country. The oil inflow fountain is coming out at a rate of up to 100 cubic meters per day. The project is operated by Becturly Energy Operating--a joint operation between KazMunayGas and Kokel Munai. KMG announced earlier that it had scrapped its idea of a 2020 IPO due to the pandemic as well as the state of the oil market.

Energy Tech

A Russian cybersecurity company is working on an anti-drone system that would discourage drones from flying over oil facilities. This comes just nine months after the devastating attacks on Saudi oil infrastructure took offline 5% of the world’s oil supplies last September.