Politics, Geopolitics & Conflict

– The United States has granted Iraq another four-month exemption from its sanctions that will allow the country to continue to import Iranian electricity and natural gas. This is the fifth waiver Washington has granted Iraq since it re-imposed the second batch of sanctions on Iran last November. Gas imports from Iran generate as much as 45 percent of Iraq’s 14,000 megawatts of electricity consumed daily. Iran transmits another 1,000 megawatts directly. Based on the official data, last year Iran exported to Iraq nearly 4.8 billion cubic meters of natural gas and five terawatts of electricity.

– Rosneft has temporarily suspended work at one block in Iraq’s semi-autonomous region of Kurdistan due to security concerns because of the blocks’ proximity to the Syrian border. Production plans for block 11 remain unchanged, while proximity to the Syrian border and the safety concerns are the only deterrents to Rosneft’s plans for block 8.

– Russian media reported that Venezuela might hand over full control of its state oil company PDVSA to Rosneft in return for debt relief. As of August, PDVSA had lowered its outstanding debt to Rosneft to $1.1 billion by the end of the second quarter, from $1.8 billion from the previous quarter. Since 2006, Russian loans to Venezuela have reached more than $17 billion in total. In the meantime, Rosneft has become the main trader of Venezuelan crude, shipping oil to buyers in China and India. However, these activities appear to not be in breach of US sanctions. On Friday, a close advisor of Nicholas Maduro denied the rumor that Venezuela was ready to hand over PDVSA to Russia. Meanwhile, Rosneft has declined to comment on the matter.

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– The US administration is warning Chinese shipping companies not to have their vessels turn off tracking transponders to conceal their movements so they can ship oil from Iran, Reuters reported citing two senior administration officials.

– US Energy Secretary Perry has officially tendered his resignation and will step down at the end of the year. President Trump has not yet named his replacement.

Market Movers

– Renewable energy gets a massive PR boost with Q3 2019 figures showing that the UK generated more electricity from renewable energy than from fossil fuels for an entire quarter–for the first time, ever. In Q3 2019, the UK generated 29.5 terawatt-hours (TWh) from wind, solar, biomass and hydro, compared to 29.1TWh from coal, oil and gas.

– Swedish carmaker Volvo Cars unveiled a target to hit ‘carbon neutrality’ by 2040, while for 2025 it plans to slash the lifecycle carbon footprint of its vehicles by 40 percent. Two years ago, Volvo announced that its new cars would be either electric, hybrid or ‘mild hybrid’ from 2019 onwards.

– Ineos has reported that its Forties pipeline has been struck by lightning, shutting down its 450,000 bpd operation. It expects to have the pipeline back up and running by noon on Friday. The pipeline is a prime conduit for transporting almost half of all UK oil and gas to the mainland. It is the second blow dealt to the UK’s oil industry this week, after on Thursday, the 2nd largest North Sea oilfield–Buzzard–was shuttered, with a capacity of 150,000 bpd. The oilfield was shut down for maintenance.

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Deals, Mergers & Acquisitions

– U.S. power company Sempra Energy said it would sell its Chilean businesses to China’s State Grid International Development Ltd for $2.23 billion in cash as part of its plan to exit South America and shore up capital. The sale also will include Sempra’s 100% interest stake in Chilquinta Energia, the third-largest electricity distributor in Chile and its 50% interest in Eletrans S.A., which owns, constructs, operates and maintains power transmission facilities. In late September, Sempra announced the sale of its interests in Peruvian energy businesses to China Yangtze Power International for $3.59 billion.

– UK-based oil and gas group Energean Oil & Gas agreed to sell its unit Edison E&P’s North Sea assets in the UK and Norway to Neptune Energy Group for up to $280 million. The divestment is part of the company’s ongoing plan to sell non-core assets. The deal follows Energean’s strategy of becoming the largest independent gas-focused E&P in the Mediterranean.

– Russia’s state nuclear company Rosatom may buy up to a 51% interest in a lithium project in Chile’s Atacama salt flat from Wealth Minerals Ltd. Atacama salt flat accounts for around one-third of the world’s lithium supply.

– Seplat Petroleum has agreed to a $422 million purchase of fellow Nigeria-focused energy firm Eland Oil & Gas. Eland holds a 45% interest in OML 40 and a 40% interest in the Ubima field license, both in the Niger Delta.

– Wells Fargo has signed a deal with Reliant, a unit of NRG Energy Inc under which 400 of the bank’s properties in Texas will be powered by a new solar park. The solar plant that will generate the power will enter construction next year in order to be completed in 2021.

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– U.S. power utility DTE Energy said it is near the acquisition of Houston-based gas pipeline system M5 Midstream LLC for about $2.5 billion.

Discovery & Development

– Russia’s Rosneft says it needs $40 billion in tax cuts for a planned oil pipeline to the Arctic Ocean. However, Russian authorities have pushed back with a moratorium on future tax breaks for oil projects. The company said that is looking to sell a 40% stake in one of its most ambitious Arctic endeavors: Project Vostok Oil, or East Oil. However, the sale it might not go through as the investors said that the sale was contingent on Rosneft receiving a massive tax break.

Legal & Regulatory Alerts

– Leftist Peronist party advisors in Argentina have asked presidential hopeful Alberto Fernandez to freeze natural gas and power tariffs, and to peg oil product prices to pesos instead of dollars in order to curb inflation and boost economic growth. If Fernandez wins the October 27th elections (and the polls have him in the lead but have been wrong before), oil companies will be waiting anxiously to see what is in store for the prized Vaca Muerta shale. While Fernandez has indicated he is all for developing this shale, leftist pressure points within his party–as well as influences from the Kirchnerites through the VP ticket–may derail foreign investors’ hopes.

– Protests have again picked up momentum in Algeria, with thousands taking to the streets in a stand against a bill intended to attract foreign investment to the oil and gas sector. Protesters believe the government is selling out Algeria’s resources.