Politics, Geopolitics & Conflict
Ahead of presidential and parliamentary elections that will now be held in May this year in Turkey, Erdogan has seen to it that the government’s powers of censorship are at an all-time high to allow it to undermine potential opponents and silence critics. This includes the December prison sentence on trumped-up corruption charges for Istanbul mayor Ekrem Imamoglu, an opponent of the government, which now makes it impossible for him to run for any political office. Criticism of the government is now a criminal offense as Erdogan prepares for a difficult challenge with an economy in tatters.
As we noted in an earlier briefing in the fall, Kurdish oil appeared set to gain a reprieve from the legal barrage of threats coming from Baghdad following the election of a new Iraqi government after a long stalemate. That peace on the oil revenue front is inching closer became clearer during the WEF in Davos this week, with Masrour Barzani, the prime minister of the Kurdistan Regional Government (KRG) saying that the federal government in Baghdad had agreed to freeze—for the time being—any court actions earlier initiated to usurp control of Kurdish oil and gas contracts and revenues.
Last week, Bulgaria signed a deal with Turkey’s state-run Botas giving the Eastern European country access to Botas’ five LNG import terminals for natural gas supplies, which would then be transported via pipeline to Bulgaria…
Politics, Geopolitics & Conflict
Ahead of presidential and parliamentary elections that will now be held in May this year in Turkey, Erdogan has seen to it that the government’s powers of censorship are at an all-time high to allow it to undermine potential opponents and silence critics. This includes the December prison sentence on trumped-up corruption charges for Istanbul mayor Ekrem Imamoglu, an opponent of the government, which now makes it impossible for him to run for any political office. Criticism of the government is now a criminal offense as Erdogan prepares for a difficult challenge with an economy in tatters.
As we noted in an earlier briefing in the fall, Kurdish oil appeared set to gain a reprieve from the legal barrage of threats coming from Baghdad following the election of a new Iraqi government after a long stalemate. That peace on the oil revenue front is inching closer became clearer during the WEF in Davos this week, with Masrour Barzani, the prime minister of the Kurdistan Regional Government (KRG) saying that the federal government in Baghdad had agreed to freeze—for the time being—any court actions earlier initiated to usurp control of Kurdish oil and gas contracts and revenues.
Last week, Bulgaria signed a deal with Turkey’s state-run Botas giving the Eastern European country access to Botas’ five LNG import terminals for natural gas supplies, which would then be transported via pipeline to Bulgaria at a rate of some 1.5 billion cubic meters per year. This deal, most notably, highlights exactly how Turkey’s plan to become an energy hub for Europe would work.
The Pentagon has ruled out–for now–sending long-range missile systems (ATACMs) to Ukraine, with officials stating that Ukraine was capable of pushing the Russians back without this more drastic type of assistance. That said, on Friday, the U.S. was expected to unveil a large package of weapons assistance for Ukraine, which has been on top of the agenda in Davos. The package is not expected to include M1 Abrams tanks but will likely include artillery, ammunition, and armor. However, if the battle on the ground now turns into all-out tank warfare, which is what some expect, Ukraine will need German and U.S. tanks to ensure victory against Russia’s tank portfolio.
Peru has declared another natural gas supply emergency–this time for Gases del Pacifico’s Concession Norte distribution system as blockades on the Panamerican highway and alternate routes continue. This follows Peru’s previously declared emergency for Petroperu’s Sur Oeste concession. The emergency allows the operator to cut gas supplies to industrial clients to make sure residential and commercial clients have enough. The blockades come shortly after former president Pedro Castillo’s removal from office and subsequent detention.
In a knock on a Baker Hughes estimate of Saudi Arabia’s rig count that pegged it at under 100, Aramco’s CEO Nasser divulged to media this week that it will have 300 rigs in operation by the end of this year. While some sources suggest this was the first time Saudi Arabia pulled the veil of its closely guarded secret on the number of rigs, the statement of future rig counts at the end of this year fell shy of telling the world how many rigs are in operation now–still, the estimate is much more than the world has been privy to up until now.
Deals, Mergers & Acquisitions
Saudi Aramco is consolidating its trading operations before a potential IPO, putting together its main trading unit with Motiva Enterprises. The new entity is called Aramco Trading Americas LLC, headquartered in Houston. It will be the regional office for Aramco’s overall trading arm. ATA will become U.S.-based refiner Motiva’s only supplier and off-taker. The move will help Aramco take advantage of the lucrative petroleum trading side of the business as it expands beyond crude exports.
The $678 million 2 Bcf/d Evangeline Pass pipeline project has been sanctioned and will now move ahead. Evangeline Pass will feed Venture Global LNG’s Plaquemines export facility in a project that will bring Kinder Morgan’s total transport potential to a considerable 14 Bcf/d. The in-service date for the pipeline is tied closely to Venture Global’s Plaquemines LNG export terminal–half of which–13.33 million metric tonnes per year–could come online next year. The second half is expected to come online sometime near the end of 2025.
Chesapeake Energy has agreed to sell 377,000 net acres and 1,350 wells and equipment in the Eagle Ford Brazos Valley region to WildFire Energy I LLC for $1.425 billion as Chesapeake looks to focus on its assets in the Marcellus and Haynesville. Average daily production is 27,700 boe, with an estimated net proved reserves of 96.8 million boe.
British Columbia and B.C. First Nations signed a historic agreement this week to jointly manage land, water, and oil and gas activities in parts of the First nation’s claim area. The sides will spend the next 18 months coming up with three plans for oil and gas development in the FN areas. Part of the agreement is to limit new land disturbances caused by oil and gas development to 750 hectares annually. Overall, the agreement concerns four percent of the B.C. province.
Discovery & Development
Russia has signed a decree for the development of the Northern Sea Route to enhance Arctic oil and gas development and shipping security. Moscow claims the terminal will be Russia’s biggest and will serve Rosneft’s Vostok Oil, which is eyeing a market for 100 million tons of oil per year by 2030. By next year already, Rosneft plans to be exporting 30 million tons from the terminal, much of it to Asia.
Equinor has made another gas discovery called Obelix Upflank in the Norwegian Sea close to the Aasta Hansteen field that is believed to hold somewhere between 2B and 11B cubic meters of recoverable gas, or between 12.6 million and 69.2 million boe. The find could be tied back to Irpa, which is less than 25km away. Equinor is partner with Petoro and Wintershall Dea. Equinor is operator.
Earnings
Kinder Morgan has beat analyst estimates (and well above its own expectations) for Q4 2022 profit on the back of Russian sanctions, which resulted in transporting more nat gas, jet fuel, and carbon dioxide and helped to raise prices. Earnings from KM’s nat gas pipelines rose 11% from the year-ago period to $1.4B for the quarter, with adjusted profit rising to $99 million. Revenue missed analyst expectations, coming in at $4.6 billion.