Market Movers
• Aramco has failed in terms of trying to bring foreign investors on board. So for now, the $26-billion Aramco IPO is very localized. That also means that the payday wasn’t nearly as lucrative for bankers. It might be the world’s most profitable company, but for bankers the fees ended up being 0.35% of the $25.6 billion raised, split between 17 of them. That’s only $90 million total--a wash when you consider how banks were salivating over the prospects just a couple of years ago.
• Poland is gearing up to halt gas imports from Russia at some point due to increased LNG imports primarily from Qatar and the U.S. We say “at some point” because it is not entirely clear yet, though the inference comes from the fact that the Polish state-owned natural gas company (PGNiG) has a supply contract with Gazprom that expires on December 31, 2022, and the company has said it does not intend to renew that.
• Russia’s Gazprom announced the sale of 3.6% of its shares in a second offering this year. This would complete the sale of its so-called quasi-treasury shares. The company stated earlier in the week that it would sell 850.6 million ordinary shares with the stake estimated to be worth $3.3bn. Gazprom reported on Friday that it had finalized a deal, selling that $3 billion of the company to a single buyer, the name of which it has not disclosed.
Discovery & Development
• BP’s Trinidad…
Market Movers
• Aramco has failed in terms of trying to bring foreign investors on board. So for now, the $26-billion Aramco IPO is very localized. That also means that the payday wasn’t nearly as lucrative for bankers. It might be the world’s most profitable company, but for bankers the fees ended up being 0.35% of the $25.6 billion raised, split between 17 of them. That’s only $90 million total--a wash when you consider how banks were salivating over the prospects just a couple of years ago.
• Poland is gearing up to halt gas imports from Russia at some point due to increased LNG imports primarily from Qatar and the U.S. We say “at some point” because it is not entirely clear yet, though the inference comes from the fact that the Polish state-owned natural gas company (PGNiG) has a supply contract with Gazprom that expires on December 31, 2022, and the company has said it does not intend to renew that.
• Russia’s Gazprom announced the sale of 3.6% of its shares in a second offering this year. This would complete the sale of its so-called quasi-treasury shares. The company stated earlier in the week that it would sell 850.6 million ordinary shares with the stake estimated to be worth $3.3bn. Gazprom reported on Friday that it had finalized a deal, selling that $3 billion of the company to a single buyer, the name of which it has not disclosed.
Discovery & Development
• BP’s Trinidad & To¬ba¬go unit has made an offshore gas dis¬cov¬ery at its Gin¬ger ex¬plo¬ration well, which is ex¬pect¬ed to be com¬plet¬ed by the end of November. BP is already the largest producer (by far) in Trinidad & Tobago, with 15 offshore platforms and two onshore processing facilities.
• Sustainable aviation fuel got a nice bump this week when Shell Plc said it would support the development of SkyNRG’s dedicated sustainable aviation fuel (SAF) production facility in the Netherlands. The plant would be Europe’s first and is scheduled to be commissioned in 2022 with a production capacity of 100,000 tons of sustainable aviation fuel a year.
• Norway’s Equinor and Canada’s Valeura say they have discovered 286 billion cubic meters of natural gas in Turkish Thrace. That amount is equal to five years of Turkish domestic natural gas demand.
• Total’s subsidiary Saft has won a contract from the Finnish wind developer and operator TuuliWatti, to build the largest lithium-ion energy storage system in Northern Europe (6.6 MWh of energy storage capacity and 5.6 MW of power generation).
Deals, Mergers & Acquisitions
• The big news on the M&A scene this week is the unconfirmed rumor that giant offshore oilfield service providers Saipem (Italian) and Subsea 7 are considering a merger. The idea was tabled by Rystad Energy, which has claimed that Subsea 7 had made an unsuccessful bid for another rival (McDermott) last year, and that it may now be looking at Saipem. Again, while nothing has been confirmed, a merger between these two would create a massive global offshore oilfield services giant with over $12 billion in revenue and around 40% market share.
Regulations & Legislation
• California Governor Gavin Newsom has placed a moratorium on new permits for steam injection and fracking over their alleged links to illegal spills in the Central Valley. The ban is temporary, and will be followed by an independent audit of the agency that oversees oil and gas production. That agency is suspected of having issued dummy permits leading to spills that included the 1.3 million gallon spill earlier this year in the Cymric oilfield, for which Chevron was fined $2.7 million. The audit is likely to result in new laws.
• If it wins the upcoming general elections, the UK’s Labour Party says it will introduce a windfall tax on oil businesses, with party leader Jeremy Corbyn promising "a green transformation" of the economy to reach a net-zero carbon system by the 2030s.
• Former Nigerian attorney general Mohammed Adoke was arrested in Dubai in connection to an oil industry corruption investigation by Nigeria’s anti-graft agency. Specifically, the agency is interested in the $1.3B sale of the OPL 245 offshore oilfield by Malabu Oil and Gas in 2011. Authorities issued a warrant for Adoke’s arrest seven months ago. They also issued warrants for the arrest of former petroleum minister Dan Etete, and a former manager of Italian Eni. According to the charges, Adoke played a key role in approving the 2011 sale of OPL 245 oil license to Shell and Eni, previously held by Malabu Oil, which also included a $1.3 billion signature bonus.
Politics, Geopolitics & Conflict
• Iraqi protesters blocked main roads leading to oilfields in the southern Basra province, preventing employees and tankers from entering the Al-Zubair commodities port, which has now been reopened as of Wednesday and has resumed full operations. Protests in Iraq’s oil-rich region, continue, however, and we do not expect this to end soon. What investors should be monitoring is the call for general strikes specifically meant to disrupt oil production. Meanwhile, Iraq's oil minister has promised on the Iraqi Kurds behalf that the Kurds would finally be fulfilling a long overdue (years) promise to deliver 250,000 bpd to state-run SOMO, for selling on in Turkey to fulfill its commitments. If this bucks the trend of repetitive delays, the proceeds from the oil will go to the Baghdad federal government. This would be a departure from the Kurds' current system of selling its oil independently. But any progress on this oil deal will be hard fought, with the recent protests disrupting federal budget talks with the Kurds amid massive government uncertainty.
• Egypt, Greece and Cyprus launched Nov. 3 a new set of joint air-to-air military exercises, codenamed Medusa 9, to counter “potential threats in the Mediterranean”. While on the surface this may seem benign, it is part of a wider geopolitical development. From the Greek and Cypriot perspective, it is about containing Turkey, which has been drilling offshore Cyprus in an attempt to disrupt Cyprus’ own oil and gas exploration operations. For Egypt, keep in mind that Egypt and Turkey are fighting on opposite sides of the Libyan conflict. In other words, The Egypt-Greece-Cyprus military exercises are all about Turkey.
• According to official numbers, at least 12 people have been killed in Iran since protests erupted over fuel price hikes earlier this week. Unofficially, the number of deaths are estimated to be higher. Amnesty says over 100 people have been killed. The situation on the streets is unclear due to a nationwide internet blackout. But demonstrations are reportedly continuing in some cities. Iran has claimed victory over the protestors, alleging that it has contained the matter, but the fact that the government instituted an internet blackout makes it difficult to keep tabs on the state of affairs.
