Politics, Geopolitics & Conflict
General Khalifa Haftar, the commander of the Libyan National Army (LNA), is in the process of rounding up supporters of the former Ghaddafi regime in Sirte ahead of the September 1st anniversary of Ghaddafi’s coup. Previously allied (as recently as 2019 when Haftar attempted and failed to take Tripoli), they are now enemies, with Ghaddafi’s son, Saif, having competing presidential ambitions with Haftar.
This is all happening against a complicated backdrop of what appears to be progress towards stability in Libya. This week, we saw the Central Bank of Libya announce that for the first time in nearly a decade, its two rival branches (in Tripoli and Benghazi) would be unified. This has been a major sticking point for stability because the Tripoli branch controls the oil revenues, even though Libya’s east (represented by Benghazi) largely controls physical oil. Haftar had given the Government of National Accord (GNA) until August to come up with a scheme for the “fair distribution” of oil revenues, with Benghazi up in arms over not receiving the amount of oil revenues it believes it is entitled to given that it houses the oil fields and export terminals for the most part.
The back-and-forth civil war is all about this. We are skeptical that the Central Bank unification announcement will be the elixir necessary to hold elections to end political instability, and it remains unclear what sort of deal-making is going on behind the scenes between Haftar and his rival, Dbeibah, the head of the GNA in Tripoli.
Turkey is holding the Iraqi Kurdish oil export pipeline hostage now, using it as leverage to force Baghdad to declare the PKK a terrorist organization.
India this week traded oil with the UAE in Rupees for the first time, in a significant step towards undermining the petrodollar.
Deals, Mergers & Acquisitions
As bargain shopping in the American shale patch gains momentum, Permian Resources shale producer this week announced it would acquire Earthstone Energy for around $4.5 billion, in an all-stock deal. The deal will see Permian Resources increase its foothold in the Delaware Basin.
Norway’s Equinor is said to be exploring the sale of its Azerbaijan assets, which include a 7.27% interest in the largest oil project in the Central Asian nation, the Azeri-Chirag-Gunashli field. The assets are potentially worth $1 billion. Equinor has not confirmed the reports, which saw Bloomberg citing unnamed sources.
French TotalEnergies has entered into an agreement to acquire a 40% participation right from CapeOmega in the Luna carbon dioxide storage project offshore Norway. Wintershall DEA Norge operates the project with a 60% stake.
Mexican billionaire Carlos Slim’s Grupo Caria has acquired a 5.9% stake in Talos Energy, eyeing the Zama development offshore Mexico, after announcing earlier this year that it would acquire a 49.9% interest in the company’s Mexico subsidiary, Tales Mexico. Zama was discovered in 2017 and its development has been delayed (despite the high level of potential) by regulatory hurdles and a dispute with state-run Pemex.
French utility Engie will acquire full ownership of Houston-based Broad Reach Power, a power storage company. Broad Reach has power assets of 350 megawatts presently, with a pipeline of 880 megawatts under construction and a further advanced-stage 1.7-gigawatt project.
Discovery & Development
China’s state-run SINOPEC has been certified for another 30.55 billion cubic meters of proven reserves in its deep natural gas reservoir in the Bazhong gasfield. That gives Sinopec 154.7 bcm in the reservoir.
Russian Rosneft claims to have increased natural gas output from its northern Suzun field in the Vostok Oil project to around 1.8 million cubic meters per day, though the percentage of increase was not revealed.
Phase 11 of Iran’s South Pars gasfield has begun production, with four wells now in early-stage production with output at 11 Mcm per day. Output from Phase 11 will feed Phase 12’s onshore refinery. This project was a long-time coming to this point. Initially launched in 2017, sanctions have thrown up many hurdles for the nearly $5-billion project.
Exploratory drilling has begun offshore Lebanon in Block 9, while the energy ministry also announced that a seismic survey would be conducted on neighboring Block 8. The results of first drilling are expected within 9 weeks.
Wintershall Dea has started first production at the Norwegian Sea-based Dvalin gasfield. This is the second startup of production at this venue, with the first turning up mercury in the well stream and requiring remediation. The startup of production here is being heralded as a positive development in terms of timing (i.e. to feed European markets in time for winter demand).