We have truly enjoyed cheering for our favorite Olympic teams and athletes over the past three weeks—what a platform to show their incredible talents, the results of their years of hard work, and pride for their roots and motherlands. I can’t wait to watch some events live in 2028 in Los Angeles, which is planned to be a car-less Olympics!
Now, let’s get to two interesting pieces of energy news from last week.
Shangyou Nie
Editor, Well Read
IEA Boss Fatih Birol Under Pressure
Drozd Irina/Shutterstock.com
The Financial Times published an extensive article last week with the headline “The IEA’s divisive mission to decide the future of oil.” The article reveals that the International Energy Agency, specifically its executive director Fatih Birol, has been under pressure for being too partisan in its approach.
About the IEA:
The IEA was founded in 1974 by 16 OECD countries as an intergovernmental agency in response to the 1973–1974 oil crisis. Its goal was to help advanced economics coordinate oil supply security.
The IEA has since added 15 more Member countries (such as Korea and Poland); 13 Association countries (such as China and India); and five Access countries (such as Columbia).
What's new:
The IEA has been accused of becoming increasingly more political, rather than focusing on its main mission of energy security.
The IEA has not been consistent in its energy policy recommendations. It has encouraged oil companies to “invest and invest” as recently as 2017.
The IEA has been criticized as “anti-oil” and “playing politics,” especially by American Republicans and some energy company executives.
“Taxpayer dollars should not fund an organization that works against the interests of the American people,” said Carla Sands, who leads the energy policy program for the America First Policy Institute.
Some say that the IEA is playing a “dangerous” game that might lead to energy price spikes if companies decide to significantly scale back their investments in fossil fuels now.
What Birol is saying:
Birol became executive director in 2015 and is serving his third four-year term, which ends in 2027.
Birol is warning oil companies to revisit their investment strategy, as “a glut of oil,” an oversupply of some 8 million barrels, is looming before the end of this decade, he says.
Birol continues to defend the IEA’s approach and argues that energy security and climate change are both important.
Birol claims that the IEA is still “number-based” and has a broader view of the energy world than any individual country or single type of energy.
What do IEA supporters say?
“The IEA has done very well. It has gained a lot of supporters and been recognized for its leadership,” said one energy analyst quoted by the Financial Times.
“I hear the complaints from the oil companies and OPEC, but climate change is arguably the biggest issue facing the energy industry, so the idea that IEA should not focus on it and just look at oil supplies is quite bizarre,” one supporter said.
“A huge priority is establishing a platform for us to be able to respond (to request advice),” says Tim Gould, the IEA’s chief economist.
What to watch:
Will the U.S. government—especially if Trump wins the 2024 election—force the IEA to change direction?
How will other member countries continue to view and support the IEA and Fatih Birol?
Will the IEA have to redefine its core mission?
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Last week, many American independent companies continued reporting Q2 and 1H 2024 results. Here, I’ll highlight two of them: ConocoPhillips, as an example of a large independent, and Cheniere Energy, as a pure play LNG provider.
COP produced 1.9 million boed in Q2, a new record.
The lower 48 delivered 1.1 million boed for COP, including 748,000 boed from the Permian, 238,000 boed from the Eagle Ford, and 105,000 boed from the Bakken.
COP signed two new long-term LNG sales agreements with European and Asian buyers, with delivery starting in 2027.
The acquisition of Marathon Oil is progressing and expected to close in Q4.
COP did $1 billion in share buybacks in Q2 and $2.3 billion in 1H.
COP’s share price dropped 7 percent YTD and decreased a similar amount in the past year.
The not-so-good news: COP reported“upward movement” for annual CapEx guidance of $11.5 billion, mainly due to progress in the $7 billion Willow project in Alaska. OpEx guidance also increased to $9.2–$9.3 billion for the whole year.
Cheniere Energy highlights:
Cheniere Energy is America’s largest LNG provider, and its share price has grown 8.7 percent YTD and 11.8 percent in the past 12 months.
Cheniere did $500 million in share buybacks in Q2 and $1.7 billion during 1H 2024.
Cheniere exported 11 MT of LNG in Q2 and 23 MT of LNG in 1H 2024. More than half of these exports went to Europe. The remainder went to Asia, Latin America, the Middle East, and North Africa.
Cheniere is targeting FID for two projects in 2025 and one in 2026.
The not-so-good news: Cheniere’s lower earnings this year are partially due to lower margins, as a result of higher shares of LNG sold through long-term contracts rather than spot cargos.
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