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By David Gaffen, Editor, Energy Markets

Hello Power Up readers! The oil market remains unsettled on expectations that Israel will continue to escalate operations in Gaza following the attacks by Hamas that killed hundreds. Worries about demand have kept the rally in check, though, and so oil remains in the mid-$80s while natural gas prices saw a bump after Chevron was told to close its Israeli field for the time being. There is more to say about this, but let’s start with Exxon and Pioneer Natural… 

Today’s top headlines:

• How stars aligned for Exxon’s $60 billion deal with Pioneer
• IEA, OPEC predictions for 2024 demand growth diverge
• G7-led coalition renews efforts to enforce Russian oil price cap

ExxonMobil and Pioneer Natural Resources logos. REUTERS/Dado Ruvic

Exxon Mobil is indeed going to buy Pioneer Natural Resources for about $60 billion in its biggest transaction since before the U.S. shale boom. Many analysts pointed out that Pioneer CEO Scott Sheffield, one of the most influential in terms of the shale revolution. But Exxon’s new position as the biggest operator in the Permian doesn’t mean more oil, as Arathy Somasekhar reports here. 

Exxon’s new capacity would be about 1.33 million barrels of oil and gas equivalent per day, but analyst say that it may not want to grow more rapidly. The company has been heavily focused on cost-cutting to revive its share price, and recent consolidation, including Civitas Resources and Callon Petroleum-Percussion, has led to reductions in the combined companies’ active drilling rigs.

“With this Pioneer deal, there is a possibility that Exxon might say they’ve achieved that growth target for Permian production and so they don’t have to grow as rapidly as they originally intended,” says Ajay Bakshani, director of analytics at research firm East Daley Analytics. 

Abdulaziz bin Salman, keeping the party going.

Saudi Energy Minister Prince Abdulaziz bin Salman said in a Russian TV interview that it was necessary to be “proactive” on the oil market and attempt to bring stability to it – a justification for the supply cuts that have kept the price above $85 a barrel and worried some who see supply growing scarce in coming months. He said in the interview, conducted on Wednesday and aired on Thursday, that the market was unpredictable and “cannot be left on its own.” 

OPEC on Thursday said its forecast for relatively strong growth in global oil demand in 2023 in 2024 wasn’t going to change, as the economy remains strong so far this year; they still expect demand to rise by 2.25 million barrels per day in 2024, compared with growth of 2.44 million bpd in 2023.  

Operators at a nuclear plant run by France’s EDF. 

France’s finance minister said it can in coming days reach an agreement with Germany to break a deadlock between the two countries on reforms to Europe’s energy market, as Reuters reports here.  “We strongly believe that there is a need to define a new framework that will be more efficient, and that will lead the possibility to all member states to develop their own energy production,” Minister Bruno Le Maire said. 

The two countries have been at odds with each other over a plan to make power markets more predictable, but Germany believes the plan could give countries a more competitive edge like France, which would use fixed-price power contracts to its existing nuclear fleet and then use those revenues to subsidize other industries. France produces about 70% of its electricity from nuclear, where Germany is more reliant on gas.   

That’s a pipe yard servicing government-owned oil pipeline operator Trans Mountain in British Columbia. REUTERS/Jennifer Gauthier

Canada faces a tough battle to recoup the roughly C$35 billion ($25.7 billion) spent by taxpayers to fund the Trans Mountain oil pipeline, which the government bought in 2018 in a rescue effort for the foundering plans. Uncertainty over shipping tolls and a limited pool of buyers means it will be hard for the True North to extract the value it would hope to get from a sale, as Nia Williams reports here. 

Ottawa plans to sell Trans Mountain once a long-delayed expansion to nearly triple its flow of crude is finished next year. The costs have quadrupled and analysts do not believe the line is worth as much as its costs. The sale has seen muted interest from other pipeline operators due to higher financing costs. 

“Turbulence on energy markets is the new normal.”  

Michael Strugl, CEO of Austrian hydropower company Verbund 

Chevron and unions at its liquefied natural gas (LNG) facilities in Australia are making progress in talks on pay and conditions, but still don’t have a deal, as Reuters reports here. The talks will continue Friday as part of the second round of talks mediated by the country’s labor commission.  

Unions halted weeks of strikes in late September at the facilities that supply around 6% of the world’s LNG after an earlier round of talks produced a deal – which unions later said Chevron reneged on. The back-and-forth has contributed to a recent rise in natural gas prices as well. 

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