Russian Economy vs. Sanctions

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Daily Standup Top Stories

Highlights of the Podcast

00:00 – Intro

01:43 – What do oil and gas exports mean to the Russian economy? How will the new Biden Sanctions play with President Trump’s negotiations?

06:18 – Nord Stream pipeline to be relaunched — German chancellor candidate

08:34 – Azerbaijan halts gas deliveries to Serbia, Bulgaria

11:14 – GOP Rep Unveils Bill: No President Can Ban Fracking Without Congressional Approval

13:43 – Constellation Energy to Buy Calpine in $16.4 Billion Deal

16:07 – Markets Update

19:10 – Rig Count Overview & Summary Count

20:18 – Outro

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Video Transcription edited for grammar. We disavow any errors unless they make us look better or smarter.

Michael Tanner: [00:00:09] What’s going on, everybody? Welcome into the Monday, January 13th, 2025, edition of the Daily Energy News. Beat Stand up. Here are today’s top headlines. First up, what do oil and gas exports mean to the Russian economy? How will President Biden’s new sanctions play with President Trump’s negotiations? This is an interesting article that mainly covers exactly what happened with the new Biden administration sanctions that got put, which really caused oil prices to spike. So we will cover this on both ends of the article. Next up here, Nord Stream pipeline to be relaunched according to a potential German chancellor candidate. Well, we’ll see if this one actually goes through. Azerbaijan holds gas deliveries to Serbia and gold Bulgaria. You wouldn’t wouldn’t want a disagreeable Gary at this time of the year. Next up, GOP rep unveils Bill. No president can ban fracking without congressional approval. And then finally, in the new segment, Constellation Energy two by Kal Penn in a $6.4 billion deal. I mean, reasonable running this in the new segment is it’s got a little bit more to do with nuclear and clean energy than it does with oil and gas finance. So we’re going to let Stu talk about what this means for the business. Stuart will toss to me, I will quickly cover what happened in the oil and gas markets and we’ll spend a little bit more time talking about these Russian sanctions and why really, as we’ve seen prices continue to run the last few days, what exactly that means. We will cover all that and a bag of chips. Folks, as always, I am Michael Tanner, joined by Stuart Turley. Where do you want to begin? [00:01:43][93.1]

Stuart Turley: [00:01:43] Hey, let’s start with what do oil and gas exports mean to the Russian economy? The second question in this article is how will the new Biden sanctions play with President Trump’s negotiations? Michael, I did not see this sweeping sanctions from the Barber Deville out of the Treasury secretary. I mean, she needs she needs a new hairdresser. Holy smokes. Batman minds. Bad minds flesh hers off the charts. But let’s start here with this article. This article is from a couple of Russian gentlemen, and I thought it was very interesting that we would they would even have some great comments in here. Let’s go through what was sanctioned by the Treasury and Gazprom. Neft ranked third and fourth in Russia for oil extraction, along with subsidiaries, as well as personal sanctions against Vladimir Bogdanov and Alexander Doko, heads of Saratov Gas and Gazprom. Insurance companies, shipping companies. Gold the greatest carrier, the biggest carrier of the Russian oil. 183 vessels believed to be part of the shadow fleet. 20 foreign trading companies and dozens of officials in the energy ministry. Now, how does this affect the Russian economy? Russian export income will decline and import prices will go up. It will further weaken the ruble. Now, Michael, the shadow fleet is really unknown how many are out there. I’m thinking it’s in the 800 tankers. And right now, the sank US sanctions, less than 7% of the tankers that are around the world. So I don’t know that the sanctions are going to impact in the short run. They’re not going to impact the will of the Venezuelans, the Iraqi and all of the other ones to get around the OPEC quotas. And it’s the insurance companies, Michael, that the shadow fleet gets 80%. I just ran another article on this on news beat 80% of the shadow fleet. Let’s say it’s 800 tankers do not have insurance. And we just saw three of them last month. Sink. Who pays for that cleanup? So this is huge. [00:04:11][147.9]

Michael Tanner: [00:04:12] There’s obviously a pricing component to this, which I’ll talk about a little later on. But I think the real reason this was done was is theoretically a negotiating tool for the Ukrainian delegation and the incoming administration in order to make some sort of deal with Putin. The question was, will this is this a chip that will actually help a deal get made or is it just irrelevant? [00:04:37][25.2]

Stuart Turley: [00:04:38] Why would the Biden secretary, a secretary of treasury, do this without talking to President Trump? I don’t know. There is a big section, a group within the Democrat Party now saying that Trump is not going to be able to reduce the sanctions without Congress, and that’s due to a bill that they ran through last year. So this looks to me like they’re trying to hinder President Trump rather than help him. [00:05:09][31.0]

Michael Tanner: [00:05:09] It’s it’s stupid. It’s stupid. And it makes it look more, in my opinion, adversarial. And if their goal, you know, I mean, I think from a from the other side why would they do this? I mean we saw what happened to prices. Prices briefly spiked over $78 a barrel. It could be solely for the fact that, hey, can we drive up prices and start off? Give President Trump a high cost of energy as he comes into his administration. There could be something there. I, I don’t like to think that because I like to think we’re all on the same team. But I think there’s a lot of evidence to show that we’re all not on the same team. But, you know, we did see that a lot of those images coming out of President Jimmy Carter funeral. We might all be on the same team and they’re just playing us. [00:05:51][41.6]

Stuart Turley: [00:05:51] I’m not going to go there because I thought it was kind of funny that, you know, you see President Obama and President Trump yucking it up and then you see the whole rest of the live president’s not happy that that’s being funny. So that was quite interesting. And one other thing is the we need to remember the World Bank and Russia’s food exports are important to the world and this impacts that as well. So let’s go to the Nord Stream Nord Stream pipeline to be relaunched German Chancellor candidate. Now that we’re sitting here going, I see Nurse Schultz is now all of a sudden he’s facing some other folks and one of his competitors running for his slot is saying, We want the Nord Stream. I called it Regimes change when you don’t have cheap Russian natural gas. And I just thought this one was pretty funny. [00:06:49][57.3]

Michael Tanner: [00:06:49] It is funny. [00:06:49][0.4]

Stuart Turley: [00:06:50] And Nord Stream back into operation. You could count on it. Well done. [00:06:54][3.9]

Michael Tanner: [00:06:54] Well, now the real question is, will this lady win? We don’t know about that. You know, just as a reminder, guys, Germany relied on Russian for around 55% of its natural gas supply before the original Ukraine war broke out. Much of that did go through Nord Stream one, which the anticipation of Nord Stream two, which runs parallel next to it, was due to come online in 2022. But former Chancellor Merkel ended up revoking that certification for Nord Stream two several days before that Russian military, ironically, before the Russian invasion of Ukraine, not after before. Very interesting there. And both lines were destroyed in a act of sabotage. How now it’s like Covid. You you couldn’t say it was sabotage a two years ago. Now you can slowly start saying sabotage and in three years will come to find out it was actually Ukraine that blew up or this is not alleged now. [00:07:50][55.3]

Stuart Turley: [00:07:50] And you know, you don’t have three people on a USS Minnow blowing that up. It’s a deep water pipeline. One of them is still of the four pipelines, Nord Stream one, Nord Stream two one is still available for use. They did not get they got three of the four pipelines. [00:08:07][16.8]

Michael Tanner: [00:08:08] Well, good. They only got a little. But it’ll be interesting again, do I think she’s this this this candidate will win? Probably not. But at least someone’s talking about it. [00:08:17][8.9]

Stuart Turley: [00:08:17] Yeah. And it’s going to become a political issue because Germans are tired of the energy crisis caused by green energy. Subsequently, the invasion of Russia into Ukraine exacerbated the green policies. Let’s go to Azerbaijan, speaking of gas halts, gas deliveries to Serbia and Bulgaria. Holy smokes, bad man. Gas flows from Azerbaijan to Serbia have been halted and it’s unclear when they will resume. I got information from our Azerbaijan brothers and friends that because of force majeure and problems they have, as of today, they cannot count on one point 7,000,000m³ of gas is what’s coming every day. That’s a lot of gas, dude. That’s even more than a Jerry Nadler. Holy smokes. [00:09:09][51.6]

Michael Tanner: [00:09:09] It is. And I mean, it goes to show you energy security. I mean, that’s the last thing you want is a president to get a call saying, I was informed by Azerbaijan that because of a force majeure, we cannot cover one point 7,000,000 cubic feet of gas that was coming everyday. That’s unbelievable. Now guess what? They’re stuck buying from Russia. So very interesting to see what happens there. As as you mentioned, you know, Serbia is attempting to join the European Union, which is, as we always talked about under pressure, tried to pull itself off of the Russian energy supply. And the interesting part is due to these new sanctions that we talked about in the in the earlier articles, do Russians Gazprom actually has 45 days as of Saturday to exit the ownership of the largest Serbian oil company, A.S., which is among the biggest contributors, not just to the Serbian energy mix, but the Serbian economy. They own a 50% stake or excuse me, they own. Yes. And I ask is majority owned by Gazprom that holds a 50% stake, Russian’s Gazprom, which is another subsea. In your own 6.15%. And the Serbian government only owns about 29%. So it can be very interesting to see who was able to pick all that up. Serbia also receives gas via Bulgaria, which they said might be able to pick up some of the slack. But also most of this replacement gas volumes looks like it’s going to be sourced from Turkey. So at least they’ll be able to figure it out. [00:10:29][79.8]

Stuart Turley: [00:10:30] Yeah, well, Turkey’s going to lay in there in the way trying to become the gas hub, and they want to become very important and they need the revenues. And again, we talked about this last week, the revenues for the Ukraine shutting down their transit pipe system was 5% of their GDP. [00:10:48][18.6]

Michael Tanner: [00:10:50] That’s basically what it looks like. So there’s this gas pipeline that runs from Azerbaijan across the Caspian Sea into Serbia, and it’s actually operated by BP. BP was asked to comment on that. And basically they said they detected a technical issue in that subsea condensate export line between the Shah Design Alpha platform and that Shangri-La terminal. And basically that’s a complex that consists of both a natural gas gas processing plant and an oil production plant. And the quote is for operational production and export operations. When the SDR platform was suspended and the platform has been safely shut down. All people in the platform are safe. There is no environmental impact. All offshore facilities, including the state platform and pipeline, are also safe. So that’s good. At least. At least everything’s good there. We don’t have an environmental disaster. [00:11:34][43.9]

Stuart Turley: [00:11:34] Absolutely. And I’m checking the USS Minnow to see if it was there. [00:11:38][3.7]

Michael Tanner: [00:11:39] It’s in route. It’s in route. What’s next? [00:11:41][2.3]

Stuart Turley: [00:11:41] Hey, Michael, let’s go to the next one here. GOP Rep Unveils Bill No president can ban fracking without congressional approval. Holy smokes. This is really a good one. You’ve had some great comments on this one. And in the sense Congress, you know, I agree that no president, single president should be able to, with a stroke of a pen ban fracking in the sense Congress, the states should maintain primacy for the republic, regulation of hydraulic fracturing for oil and gas. And this is from Ruger. And I think you brought up some excellent points on this. The Biden administration has spent the last four years attacking American energy industry and recently attempting to shut down by banning almost all new offshore banning projects, Luger said in a statement. It will be up to Republicans and President Trump to reestablish American energy independence. Hats off to him. I really like him. And when you sit back and take a look at this California Michael in 2023, California imported 26% of their oil from Iran, Iraq as sanctioned adversary of the United States. Why are we not trying to produce a local energy rather than import from sanctioned other folks? No president should ban fracking. No state governor should have to destroy a thing. So this is very important. [00:13:15][94.0]

Michael Tanner: [00:13:16] Yeah, because it’s not like oil produced in Texas just goes to Texas. It goes nationwide. So no gov worldwide be allowed to ban fracking or say it’s a global market. It’s it’s it’s a national market. So I completely agree. Love me some some Congressman Pfluger, he’s from the great city of Midland. So he firsthand understands the nature of the relationship between fracking and oil production. So great call there. Let’s move to this last one here. Still, you’ve you actually know the CEO well. [00:13:42][26.5]

Stuart Turley: [00:13:43] I’m going to reach out to him. He is Joe Domingues Constellation’s energy president, said by combining this one is a great article and combining Constellation’s unmatched expertise in zero emission nuclear energy with Calpine. Is industry best in class, low carbon, natural gas and geothermal generation fleets. We will be able to offer the broadest array of energy products and services in the industry. This is Constellation Energy to buy Calpine an of 14 $16.4 billion deal. Michael, this is very important because you cool your conglomerate now with natural gas and the terms are very important. It is now nuclear and natural gas are very, very the cleanest energy that you can make. [00:14:37][54.6]

Michael Tanner: [00:14:38] Yes. No, absolutely. This is a $16.4 billion merger. You know, you you are all about these, you know, as smart and all the new killer stuff. So it’s gonna be interesting to see how this one plays out. You know, they’ve got a decent amount of debt over their Calpine, so we’ll see. [00:14:53][15.6]

Stuart Turley: [00:14:54] Yeah, maybe if I can get Joe to talk to them about it. Well, fire him up. [00:14:57][3.3]

Michael Tanner: [00:14:57] Absolutely. Well, let’s go ahead and jump over quickly the oil and gas finance guys, before we do that, we’ve got to pay the bills. Thank you for checking us out Here on the world’s greatest website of energy news beat.com the best place for all your energy and oil and gas. Stu and the team do a tremendous job making sure that website stays up to speed. Everything you need to know to be the tip of the spear when it comes to the energy and the oil and gas business. Go ahead and hit that description below for all the links, the timestamps links to the articles. Go ahead and subscribe to us on Substack. We are super excited to be dropping a bunch of aid only content to one of the best ways to support the show. If you joy listening to us on a daily basis, go ahead and give us a quick paid subscription over at Substack. You can also go ahead and I know it’s 2025, guys, but it’s never too early to start thinking about your tax situation and how to increase your cash flow and diversify your portfolio, take advantage of these high oil prices. Guys, we have a awesome, awesome project that we are finishing up a little bit of a little bit of introduction to. So if you guys are interested, need to diversify your portfolio. Become Billy Bob Thornton from Landman and save a little bit on your 2025 taxes. Go ahead and go to invest in oil dot energy newsbeat.com and you can go ahead and we will get you all the information there. [00:16:07][69.4]

Michael Tanner: [00:16:07] But let’s go ahead and just look at top line industry, Stu. Not a great day for the overall markets on Friday. S&P 500 and Nasdaq both down about one and a half percentage point. Two and ten year yields were up 2.7 or 1.5%, respectively. Dollar index, I was up about four 4/10 of a percentage point. Bitcoin at $94,000. So relatively trading in a flat zone. Crude oil up 3.5 percentage points again off the back of what we are seeing in the Russian oil sanctions. You know, as you mentioned, 7% of U.S. or of tankers have been taken offline due these sanctions, which equates to about 3% of oil supply. So if you kind of do some math there, we are at about $73, $74 when these sanctions took place. 3% of oil production basically goes for about 76. So you’re talking about a $3 swing for every 3%. So, I mean, that’s how some of these there’s some of this mathematics is done when you start looking at historical numbers and what people say, here’s where prices will go based on oil supply. They can use metrics like this of historical oil coming off the market. What does that equate to overall? And then back calculate increased percentages. So we love that natural gas continues its feeding frenzy upward, three up 7% on Friday, up $0.28, $3.98 a crack, $4 for the first time since way back in May of 2022. So a lot of this, again, is due to us, you know, the freezing temperatures that we had. There was some disruptions in oil supplies, but a lot of that is just due to continued continued increases in in in in prices. Stuart, do you think these Russian oil sanctions will be on for a while? I mean, how long will this 3% oil, you think be affecting? [00:17:54][107.3]

Stuart Turley: [00:17:56] I think the Biden administration has done a excellent job in torpedoing an end to the war. Not only did they extend the war, the Biden administration has again extended it right now. If President Putin did nothing, he wins the war. I’ve been covering this with George Macmillan, and this could actually be the end of the EU as well as Naito by the Biden administration, by their second order of magnitude of effects will go far. So there is a move now in Congress to make sure that President Trump just does not sweepingly end the sanctions, even though the Biden administration did not enforce the sanctions and the growth of Russian energy exports went from 35% of their GDP to almost 39% of their GDP because of the Biden’s inability to effectively enforce the sanctions. It is just absolutely a cluster. If you say. [00:19:05][69.5]

Michael Tanner: [00:19:06] To be honest, it really, really is. And so who knows what will happen. It’ll be interesting what happens with rig count because we saw rig count shed five last week, which is still down 35 from a year ago, which will, you know, we would expect to see that rig count previous year begin to converge as we started dropping rigs a little over a year and a half ago. But we’re still in a negative delta. It would be interesting to see if rigs do continue to come back with some of this new price action. But again, a lot of the rig stuff is locked up in long term contracts. So it may or may not be there, but it’s really all I’ve got to do. Kind of all quiet on the western front from my from from an oil, gas finance standpoint, What should people be worried about this week before we let him go? [00:19:45][39.5]

Stuart Turley: [00:19:46] I have no idea. But buckle up. We’re just a few days away now from President Trump being sworn in. And Dan Bongino said please do not go to the inauguration because there’s evidently a drone attack going to happen now and you have Mayor Lago locked down. Then you can’t get within two miles. And Mario, I’ll go now, so I don’t know what’s going on. Just keep your head on a swivel and get ready. [00:20:11][25.5]

Michael Tanner: [00:20:12] Yeah, absolutely. So we will wait. Do you. Wow. You won’t see us there, I promise you that. No. All right, guys, deal with that. We’ll let you get out of here. Start your week with the energy news. We appreciate each and one of you. For Stuart Turley I’m Michael Tanner. We will see you tomorrow. [00:20:12][0.0][1186.5]

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