Both Clean And Dirty Energy Gets A Push

Mike Leslie
April 25, 2024

Namibia wants to join OPEC as it prepares to reap the benefits of its crude oil resources, while India buys Russian oil.

Inputs that matter: Shell and TotalEnergies are the leading investors in Namibia's oil future, along with Qatar Energy and Global Petroleum, a UK-listed Australian driller.

  • Chevron, Portugal's Galp, and Rhino Resources are also exploring for oil in the country's Orange Basin.
  • Namibia could contain at least 10B barrels of oil.
  • Galp says it conducted testing operations at the Mopane-1X well in January and the Mopane-2X well in March, with "significant light oil columns discovered in high-quality reservoir sands."
  • The Mopane field is located in the Orange Basin, where Shell Plc (NYSE: SHEL) and TotalEnergies SE (NYSE: TTE) have made several oil and gas discoveries.

The opportunity: Guyana's Stabroek block, a 6.6 million-acre (26,800-square-kilometer) area owned by U.S. oil majors Exxon Mobil Corp.(NYSE: XOM) and Hess Corp. (NYSE: HES), as well as China's CNOOC Ltd (OTCPK: CEOHF).

  • Despite the ongoing clean energy transition, the U.S. Energy Information Administration (EIA) is the most bullish on long-term oil demand.
  • It has predicted a demand peak will come in 2050, while the OPEC Secretariat sees it coming in 2045

Zoom in: According to The Motley Fool, "Oil is a notoriously volatile commodity (just over the last five years, we've seen prices swing from negative numbers during the pandemic to as high as $120 a barrel in the immediate aftermath of Russia's invasion of Ukraine)."

  • Bank of America has tapped Targa Resources Corp. (NYSE: TRGP) and Marathon Oil Corp. (NYSE: MRO) as some of the stocks most sensitive to oil price swings.
  • Goldman Sachs has picked Targa Resources and Chevron as attractive dividend-paying energy stocks with good prospects for dividend growth.

Between the lines: In December, the U.S. Treasury Department released a proposed rule for the Advanced Manufacturing Production Tax Credit, part of the Inflation Reduction Act (IRA).

  • Known as 45X, the production tax credit is a core lever in supporting the onshoring and development of advanced manufacturing for clean energy technologies and components, including solar panels, wind turbines, batteries, and critical minerals.
  • For critical minerals, 45X provides a 10% credit on producing 50 minerals outlined in the legislation.
  • However, the cost of acquiring raw minerals to produce critical processed minerals and the cost of materials used for "conversion, purification, or recycling" of the raw material would not count toward production costs.
  • The Treasury Department has stated that the rule is written to ensure no double counting along the mineral supply chain and that the credit goes only to value-added activities.

Follow the money: G7 sanctions on Russia have resulted in an unintended effect.

  • Russia became the top oil supplier to India during the fiscal year 2023/24 for the second year in a row, squeezing the market share of Middle Eastern and OPEC producers to historic lows.
  • New Delhi has been gorging on Russian oil sold at a discount after Western nations shunned purchases and imposed sanctions on Moscow over its invasion of Ukraine.
  • Russia is now the top supplier to the world's third-largest oil importer.

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