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By David Gaffen, Editor, Energy Markets

Hello Power Up readers! The oil markets are still very edgy, concerned about the conflict between Israel and Hamas, though prices have ebbed a bit on Monday as the U.S. continues to spearhead diplomatic efforts. But the market for today is going to be most focused on Chevron, which said it will buy Hess in a $53 billion deal that becomes the second big mega-merger in U.S. oil in a few weeks.  

Today’s top headlines:

• Oil slips as investors watch diplomatic moves in Gaza war
• Chevron to buy Hess Corp for $53 billion in all-stock deal
• China calls for ‘fair’ gas pipeline damage probe by Finland

That’s Mike Wirth, CEO of Chevron, in Houston. REUTERS/Callaghan O’Hare

Chevron waded into M&A world in a major way on Monday, agreeing to buy Hess for $53 billion in an oil deal that for once does not really involve the U.S. Permian Basin, the big Texas field, as Mrinalika Roy reports here. No, Hess is most well-known for its operations in the Bakken region in North Dakota and its partnership with Exxon in Guyana, the Latin American nation that is fast becoming an important producer after major discoveries offshore in recent years. 

The deal will oddly put Chevron in partnership with its biggest rival, as the Exxon/Hess/CNOOC tie-up is the only major operation in Guyana. But the deal also diversifies Chevron’s portfolio, as it had a big presence already in Texas but not further north, and of course means it will continue to press on big oil investments – though some were surprised because Exxon’s giant purchase of Pioneer Natural earlier this month for $60 billion seemingly took them off the playing field. “We would have thought Chevron could bide its time, and hence we are a little surprised at the timing of this deal,” said analysts at RBC.  

Whether Chevron will rebrand the iconic Hess toy trucks that are a staple of the holiday season is another matter.  

That’s a Citgo gas station in New Jersey, where you cannot pump your own gas. REUTERS/Eduardo Munoz

For the past four years the U.S. has protected oil refiner Citgo Petroleum from creditors who have wanted to seize the company, a longtime subsidiary of Venezuela’s state-run PDVSA. But the bill is coming due now, as a U.S. judge on Monday will start an auction that should put the company in the hands of investors, as Marianna Parraga and Gary McWilliams report here. 

So what’s going to happen to the company? Odds are, it will be broken up, and sold to rivals or investors, though it is expected that its properties will continue to operate. Venezuela may end up empty-handed, even as Washington has decided to try to ease energy sanctions on Venezuela to get more oil flowing and offset the moves by Saudi Arabia and others to restrict overall worldwide output. 

That’s an LNG transport ship off the coast of Dakar, Senegal, and try as you might, LNG ships just aren’t all that arresting in terms of images. REUTERS/ Ngouda Dione

The world needs a lot more in the way of natural gas export facilities, and Africa is in the vanguard – with a wave of global floating facilities that convert gas to super-cool LNG to ship worldwide. The continent currently ships about 40 million tons per annum (mmtpa) of gas overseas and that could rise by more than 20% by 2027, due to projects in Mozambique, Nigeria, Senegal, Mauritania and Republic of the Congo, as Wendell Roelf and Libby George report here. 

The companies involved include Eni, BP, and Nigeria’s UTM Offshore. Some of the floating LNG facilities recently shipped from Mozambique for the first time, with the first exports from Republic of Congo set for December. Africa currently has more than 50% of the world’s floating LNG capacity – and are faster to build than onshore facilities. One controversy? About 600 million people in Africa don’t have electricity, making the export boom moot for them.  

That’s a pipe yard servicing Trans Mountain in Kamloops, British Columbia, Canada. REUTERS/Jennifer Gauthier

Canada’s energy regulator approved a tweak to the route for the government-owned Trans Mountain, the ongoing project that will allow the nation to ship another 600,000 barrels of oil a day to the Canadian west coast, as Reuters reports here. 

The shift was undertaken to make construction easier and avoid more micro-tunneling construction techniques that could delay the line by several months. The line has been delayed for years and has gone far over budget – it is expected to start up in the early part of 2024. 

“The reality in Asia Pacific here, what we’re finding is that there isn’t enough demand for biofuels.” 

Irtiza Sayyed, president of Exxon Mobil’s low carbon solutions Asia-Pacific, during Singapore International Energy Week. 

Navigator CO2 Ventures has canceled its big Heartland Greenway pipeline project – which was meant to capture 15 million metric tons of carbon dioxide annually from Midwest ethanol plants – landing a big blow to U.S. President Joe Biden’s climate strategy, which is centered around more renewables and the use of technology like carbon sequestration to reduce emissions, as Leah Douglas reports here. 

The project would have been 1,300 miles (2,092 km) long across five states, but residents expressed concern to state regulators about safety risks; the company had a permit application denied by South Dakota regulators in September; this month, the company asked Iowa regulators to pause its permit process, while it withdrew its permit in Illinois.  

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