The U.S. May Reimpose Sanctions On Venezuela

Politics, Geopolitics & Conflict

While Israel's Tamar gas field remains shut down due to the conflict with Hamas, Israeli gas flows to Egypt have now resumed (according to Bloomberg sources) from the country's larger offshore field, Leviathan. Leviathan is used to meet domestic Israeli demand, which has now reportedly been met, freeing up supply for export to Egypt.

Washington has slapped partial sanctions on the state-owned Myanma Oil and Gas Enterprise for funneling oil revenues to the Myanmar military regime. Sanctions will come into effect on December 15 and will prohibit Americans from exporting or re-exporting the company's oil and gas or from engaging in any financial services related to the company's business.

Argentina will halt exports of oil and refined products unless domestic refiners manage to normalize diesel and gasoline supplies amid severe shortages at petrol stations this week.

Washington's easing of sanctions for six months on Venezuelan oil may end up being even shorter-lived as the Venezuelan Supreme Court nullified voting in primary elections for an opposition presidential candidate, in a vote Maduro called a "fraud". Washington had only temporarily lifted sanctions on the basis of a deal between the Maduro government and the opposition to hold internationally monitored elections in 2024. The White House has not yet made any concrete move as a result of the Supreme Court's action.

Deals, Mergers & Acquisitions

Uganda will grant exclusive rights for the supply of all its petroleum products to Vitol unit Vitol Bahrain E.C. for a period of five years instead of getting oil products through Kenya as it has been, which Uganda's Energy Minister has criticized for exposing Uganda to supply disruptions and high prices at the pump. Uganda imported $1.6B in petroleum products last year. There are still legal hurdles to this scheme that parliament must vote on at a later and as of yet unspecified date.

PetroChina is proposing to purchase 265,000 bpd of Venezuelan crude after a 4-year pause due to US sanctions. Before sanctions, PetroChina was taking as much as 12 million barrels of oil from Venezuela.

Discovery & Development

Israel has awarded BP, ENI, Dana Petroleum, Ratio Energies, SOCAR, and NewMed Energy with 12 exploration licenses to uncover offshore nat gas fields. The six companies, who earned the exploration licenses in two consortiums of three, will explore two areas next to the giant Leviathan field. The licenses initially run for 3 years. Consortia that drill at least one well and carry out additional work plans will be eligible to extend the license period by another two years, for up to seven years.

Nigeria's NNPC will supply six cargoes of crude oil next month to the new $19B Dangote oil refinery for test runs. When the refinery is fully operational, it will be a game-changer for Nigeria, which could become an exporter of fuels after being completely dependent on imports. NNPC has a 20% stake in the refinery that is now years behind schedule.

Energy Earnings

Germany's Uniper reported a $10.35B profit for the first nine months of the year, aided by falling gas prices. The same period last year saw the utility post a $42.7B loss as it struggled to find suitable replacements for Russian gas and required a government bailout. Uniper expects its full-year adjusted net profit to come in around $5.3B. The robust profit is largely the result of the mark-down of derivatives used to hedge its position in the gas market, with lower prices dissolving expected forward losses.

Shell's Q3 profits fell 34% compared to the same quarter last year to $6.2B on sagging energy prices. LNG trading partially offset decreasing production. Shell announced share buybacks of $3.5B over the next three months, an increase from the prior three months, with its dividend staying at $0.331 per share. Shell's strategy is one of buying back shares instead of making large acquisitions like its US peers, Exxon and Chevron.