Oil & Energy

Date Issued – 10th April 2024

Courtesy of?Steve Alain Lawrence, Chief Investment Officer

Janis Urste, Chief Market Strategist

EIG considering Brazil

EIG, a U.S.-based private equity firm, is eyeing up to 20 investments in Brazil's midstream and renewable sectors following its $390 million acquisition of Ocyan, Brazil's unique FPSO operator. This move is part of EIG's broader strategy focusing on deepwater oil production support, renewables, and low-carbon projects. EIG's interest is bolstered by Petrobras' plan to introduce up to 14 new FPSO platforms to enhance offshore production, part of a $102 billion investment strategy prioritizing exploration and production. EIG's potential deals include bids for natural gas assets, regasification terminals, and interests in fuel storage, solar, and wind projects, leveraging Brazil's significant clean energy expansion.

Anti-Coal Policy

BMO revised its stance on financing the coal industry last year, steering clear of energy boycotting accusations from West Virginia, according to Bloomberg citing West Virginia Treasurer Riley Moore. This adjustment avoided BMO's inclusion on a list targeting financial firms perceived as undermining the state's key energy sector, following a Republican law identifying companies that limit dealings with fossil fuel businesses without valid reasons.

The list features major names like BlackRock and Goldman Sachs but excludes BMO, indicating its policy reversal. The change came after West Virginia's notice prompted BMO to clarify that its previous coal statement, removed in November 2023 for not aligning with current policies, wouldn't be reinstated, aiming to dissociate from actions perceived as harmful to West Virginia's energy economy and its related fiscal benefits.

U.S. Crude Oil Inventories

This week, U.S. crude oil inventories increased by 3.034 million barrels, surpassing analyst expectations of a 2.415 million barrel rise. This follows a decline of 2.286 million barrels reported by the American Petroleum Institute (API) the previous week. Additionally, the Strategic Petroleum Reserve (SPR) saw an uptick of 0.6 million barrels, reaching its highest level since last April at 364.2 million barrels. Amidst ongoing ceasefire discussions, oil prices dipped ahead of the API's announcement, with Brent crude falling by 0.96% to $89.51 and WTI dropping 1.26% to $85.34, although both benchmarks showed slight increases from the previous week.

$2.7 Trillion

To achieve the EU's 2050 climate neutrality goals and maintain global competitiveness, the European Round Table for Industry (ERT) estimates Europe needs a $2.7 trillion investment in energy infrastructure. This transformation includes enhancing the power grid, increasing power storage capabilities, and developing infrastructure for low-carbon hydrogen and carbon capture. The ERT highlights the necessity of $868 billion by 2030 and emphasizes the need for national and cross-border infrastructure to manage renewable energy's volatility.

The report, supported by Boston Consulting Group (BCG), suggests that increased collaboration between public and private capital and a simplified regulatory framework are essential to incentivize these critical investments. Failure to meet these investment needs could hinder the integration of zero-emission power sources and increase system costs, particularly as the demand for renewable energy and the need for energy storage to manage variability rise post-2030.

Underwater Energy Security Pact

In response to the 2022 sabotage incidents targeting the Nord Stream gas pipelines, six North Sea bordering nations—Denmark, Belgium, Britain, Germany, Norway, and the Netherlands—have unified to sign an agreement enhancing the security of their underwater energy infrastructure, including gas pipelines and electricity cables. This strategic alliance highlights the collective resolve to protect crucial energy routes vital for Europe's oil, gas, and future renewable energy supplies. Denmark's Climate, Energy & Utilities Minister, Lars Aagaard, emphasized the North Sea's role as a cornerstone for Europe's transition to renewable and secure energy, supporting a fossil-free future.

The agreement focuses on evaluating existing security measures, sharing critical information, and strengthening cooperation among the countries to prevent disruptions in energy supply, reflecting a concerted effort to maintain energy stability amidst geopolitical challenges and shift towards sustainable energy practices.

Venezuela’s Ex-Oil Minister

Venezuela's former oil minister, Tareck El Aissami, has been arrested on corruption charges, including money laundering, treason, and criminal association. The arrest stems from an investigation into a scandal at the state oil company, PDVSA, involving the disappearance of up to $3 billion from oil sales. El Aissami, who resigned last March amid the scandal, is accused of diverting oil revenue through the country's cryptocurrency control agency. With a six-month U.S. sanctions suspension set to expire on April 18, Venezuela faces the potential return of sanctions unless commitments to fair elections are met. This situation jeopardizes recent gains in oil production and prospects for diversifying oil export markets, including Europe.

Iran’s Route Control

The commander of Iran's Revolution Guard's navy, Alirez Tangsiri, has issued a conditional warning about the potential closure of the Strait of Hormuz, a critical maritime passage for the global oil supply, in response to perceived threats, particularly highlighting concerns over Israel's actions in the United Arab Emirates and its recent airstrikes in Syria. While emphasizing a cautious approach to retaliation, Tangsiri underscores Iran's historical stance on the strategic strait, through which 20.5 million barrels of petroleum products flow daily, signaling Iran's capacity to influence regional security dynamics.

The Strait of Hormuz's significance as a chokepoint in global energy markets renders any threat to its openness a matter of international concern, reflecting the complex interplay of geopolitical tensions, economic interests, and the imperative for diplomatic engagement to maintain stability in energy transit pathways.

[Disclaimer: This article provides financial insights & developments for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.]

Explore investment opportunities with our dedicated relationship managers. Schedule a face-to-face and/or video meeting to help you achieve your financial goals. Visit our Website