Wednesday, 31 July, 2024 / Edition 18

The Paris 2024 Olympic games have begun! Our daughter helped us set up an account to watch any sports event for our favorite teams or athletes, and we are taking full advantage. I hope you are enjoying cheering during the events, too.

Now, let’s launch into the top energy news from this past week.

Shangyou Nie

Editor, Well Read

Russian Gas Production Rebounds Despite Sanctions

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Russian gas production grew more than 8 percent YOY in 1H to 346 bcm, despite ongoing sanctions imposed from the U.S. and European countries.

Driving factors: Russia’s rebound in gas production was due to:

• Increased gas exports to China and Central Asia, higher LNG production, and higher domestic gas demand

• Increased Russian production of fertilizer, which was then exported to Europe, where some fertilizer plants had to be shut down due to high gas prices

• Gas exports to Uzbekistan, where gas flows had to be reversed through a legacy gas pipeline in 2023

Production and export details:

• Production from 2021–2023 dropped from 763 bcm to 638 bcm, largely as a result of imposed sanctions. Russia has stopped reporting stats on individual companies.

• Russian LNG production increased 5 percent to 17.4 mt in 1H 2024 via its four ongoing projects: Yamal LNG, Sakhalin 2, Prigorodnoye LNG, and Vysotask LNG.

• Despite ongoing sanctions and the war in Ukraine, Russia continues to supply gas to Europe via existing pipelines in Ukraine and the subsea TurkStream across the Black Sea.

• According to Russian news agency Tass, Russian gas production is projected to reach 667 bcm for 2024, an increase of 5 percent YOY.

Looking ahead:

• Russian gas production might stabilize, or even grow from its 1H 2023 level, as European gas demand appears to have stabilized.

• Russian gas export to China will reach the maximum contract level of 38 bcm per year in 2025 until new pipelines are constructed.

• No significant progress was made during Putin’s recent visit to China for the Power of Siberia 2 gas pipeline, according to the Financial Times.

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European IOCs Report 1H Results

TotalEnergies, Eni, and Galp Energia released their financial results for 1H and Q2 2024, revealing important insights into their respective companies.

TotalEnergies highlights:

• TotalEnergies reported $10 billion in net income during 1H 2024 and $4.7 billion in Q2.

• 1H 2024 net income dropped 11 percent YOY, mainly due to lower margins in refining and chemicals and lower LNG demand in Europe. Despite the drop, Total will buy back $2 billion in stock during Q3.

• Upstream production reached 2.4 million boed.

• TotalEnergies acquired new LNG assets in the Eagle Ford Basin and UAE, as well as upstream assets in Malaysia, deepwater Congo, and São Tomé and Príncipe. It sold non-core assets in Nigeria, Congo, U.K, and Brunei.

• TotalEnergies hopes to restart its $20-billion Mozambique LNG project after the country’s presidential election in October. The project has been under force majeure since 2021 due to security reasons.

• CEO Patrick Pouyanné revealed that high gas content will make development of its Venus oil discovery in Namibia more challenging.

Eni highlights:

• Eni reported a net profit of $3.4 billion in 1H 2024.

• Upstream production reached 1.7 million boed. Eni discovered 1 billion boe through exploration in Ivory Coast, Mexico, and Cyprus.

• Eni completed its acquisition of Neptune Energy and formalized its partnership with Ithaca Energy for the North Sea upstream projects. It divested non-core assets in Nigeria and Alaska.

• Eni is deploying a hub and satellite organization model.

• The satellites include upstream focused affiliates Azule Energy, Vår Energi, Ithaca Energy, Eni’s CCUS line of business, and renewables-focused affiliates Plenitude, Enilive, and Biochemistry.

• Eni signed a partnership agreement with private equity firm KKR for 20–25 percent of Eni’s biofuel Enilive, which is valued at roughly $13 billion.

• Eni COO Guido Brusco said, “We see much more value in the integration rather than buying and selling gas from a third party,” when asked why the company has not purchased equity in U.S. LNG.

Galp Energia highlights:

• Galp Energia said that it is “reassessing its decarbonization targets considering the potential effect of the Mopane discoveries in Namibia and the slow execution of renewable developments.”

• It will be important for Galp to find a partner which will fast-track development on its Mopane project.

• Galp will start drilling one of four wells in Q4 2024, focusing on its appraisal program for the Mopane field.

• Galp said that it does not expect significant contribution from a new partner for the first two appraisal wells, implying a potential farm-out timeline in Q4 2024 or 1H 2025.

• Galp reported EBITDA of $1.9 billion and operating cash flow at $1.3 million for 1H 2024 with a net debt of $1.3 billion.

• Upstream production reached 106,000 boed and is projected to grow to 145,000 boed once production in Brazil comes onstream.

• Galp received $855 million in proceeds from its Angola exit and reached an agreement to sell 10 percent equity in Area 4 in Mozambique to ADNOC for $1.7 billion; the latter deal is yet to be closed.

What to watch: We will touch on BP’s earnings next week, as well as Shell, ExxonMobil, and Chevron.

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✉️ To get in touch with Shangyou, send an email to editorial@aapg.org.