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By David Gaffen, Editor, Energy Markets

Hello Power Up readers! The oil markets are still mostly displaying generalized weakness in a way that has spooked the Saudis and Russians enough to chatter about the possible extension or increase of current supply curbs. With the way COP28 is going, that’s about the only restriction we’re seeing on fossil fuels right now – the climate summit looks like it won’t come to an agreement to reduce fossil-fuel usage, thus making one question the point of the whole thing. Our Sustainable Switch newsletter has all the U.N. conference’s updates — you can sign up here. Let’s look first at what’s up in Dubai… 

Today’s top headlines:

• Oil prices hold, investors still wary
• Business booms on the sidelines of COP28
• INSIGHT: No global carbon price? Some companies set their own

That’s a whole load of people at the United Nations Climate Change Conference (COP28) in Dubai, and we’ll see if they get anywhere. REUTERS/Thomas Mukoya

So, the latest draft of the potential climate deal at the COP28 summit on Monday has a lot of options to reduce greenhouse gas emissions – but it seems to have scrapped a call to “phase out” fossil fuels that was in an earlier draft, as Reuters reports here.  

This has been a key goal of the summit, held in the United Arab Emirates this year. U.N. Secretary General Antonio Guterres said a central benchmark of success for COP28 would be whether it yields a deal to reduce coal, oil and gas use fast enough to avert disastrous climate change. But the new draft of the COP28 agreement proposed distinct options but did not refer to a “phase out” included in an earlier draft. 

What sources told Reuters is that Saudi Arabia opposed any mention of fossil fuels in the first place. The country is the world’s largest crude oil exporter and almost wholly dependent on its oil and gas industries for its livelihood.  

That’s Occidental Petroleum President and CEO Vicki Hollub last year in Riyadh. Oxy is set to take on more debt to buy Crownrock. REUTERS/Ahmaed Yosri

Occidental Petroleum, one of the biggest operators in the big U.S. Permian basin in Texas, is getting bigger after it said it would buy CrownRock in a cash-and-stock deal valued at $12 billion including debt, as Reuters reports here.  

Oxy is going to take on about $9 billion in new debt for the deal, which could concern some investors after the company had to add a lot of leverage just before the pandemic when it bought Anadarko Petroleum and went to Warren Buffett for financing. There have been several big U.S. oil deals of late, including Exxon Mobil’s $60 billion deal for Pioneer Natural Resources and Chevron’s $53 billion agreement for Hess in October. 

This is the last 10 years, and Tellurian shares have basically been erased. (David Gaffen)

Tellurian has ousted its chair and co-founder Charif Souki as an executive officer, as Curtis Williams and Arunima Kumar report here. The company, a big U.S. liquefied natural gas developer, opted to show Souki the door weeks after auditors raised doubts about the company’s ability to cover future expenses. 

Souki is an LNG pioneer, helping to create the market in 1996, turning Cheniere Energy from an LNG importer into a major exporter. He was forced out of Cheniere – one of the biggest U.S. LNG exporters – but he was unable to repeat the same success at Tellurian. It isn’t hard to see the stark difference between the success Souki had with Cheniere and with Tellurian than just looking at their equity prices. The former is an LNG giant with a market value of $42 billion; Tellurian shares trade at 78 cents each. 

Tellurian has changed its strategy to build a project known as Driftwood several times over the years but has never attracted enough potential clients for the first, $14.5 billion phase of the facility. 

That’s a beach near Port Moresby, Papua New Guinea, where locals see an LNG carrier called Kumul docked at an marine facility. REUTERS/David Gray

Papua New Guinea’s state-owned petroleum company is in talks with Chinese banks to help fund stakes in the two major liquefied natural gas (LNG) projects in the country, as Lewis Jackson reports here. The company, Kumul Petroleum, is in talks with banks in the U.S., Europe and Australia, but talks with Chinese banks had gone further as they had fewer concerns around fossil fuel development. 

The country has a lot of natural resources but is looking for more foreign investment to boost its economic growth; the two projects are known as Papua LNG and PNG LNG.

“We’re the fourth largest oil and gas producer. We get it. It’s complicated. It’s unnerving. It creates uncertainty in parts of our country. But it’s not a reason not to do it.”  

Canadian Environment Minister Steven Guilbeault at COP28, on a possible agreement on phasing out fossil fuels 

Venezuelan oil has rallied after the recent suspension of U.S. sanctions on the country – sending up prices of sanctioned oil from Russia and Iran to China as well, as Reuters reports here. Washington’s six-month waiver of sanctions on Venezuela has boosted competition for the country’s heavy oil and reducing supply to top buyer China. As a result, some of the independent refiners in China have started to look for the next-cheapest oil which comes from Russia and Iran. 

The discount on Venezuelan crude to China has narrowed to about $11 per barrel from $20 below benchmark ICE Brent – causing those refineries known as “teapots” to look for alternatives. 

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