Good morning, this is the Oil Patch. We're the Rosetta Stone of oil and gas. We teach you the lingo so you can speak oil and gas like a natural.

Here's what the Oilman has for you today:

• SPR Surprise

• Aussie Court Overturns Gas Exploration Blockade

• China Swoops in to Control Iraq's Oil

• Tweet of the Day

SPR Surprise

It's a typical day in the oil market, and oil traders were expecting news of a refill for the Strategic Petroleum Reserve (SPR). However, the U.S. government had a different plan, announcing a release of 26 million barrels of crude oil from the SPR, defying the expectations of some traders.

And prices tanked

West Texas Intermediate Crude futures and Brent crude futures fell by 1.77% and 1.66%, respectively. The DOE had considered cancelling the fiscal year 2023 sale of the 26 million barrels, but that would have required Congress to act. The move comes after the Biden administration sold a record 180 million barrels from the reserve last year to combat rising fuel prices.

This hurts as traders were expecting a refill

With the energy market already reeling from inflationary concerns, this development could trigger renewed sell-offs in risk assets, including oil. However, supply concerns have eased as the Energy Information Administration expects record March production from the seven biggest U.S. shale basins. Meanwhile, crude exports have resumed at a crucial Turkish port after a devastating earthquake. The oil market could get even uglier if inflation proves to be harder to tame.

Oil traders may have been surprised by the U.S. government's decision to release crude oil from the SPR, but the move may have implications on the market in the long term. As always, traders will be watching the market closely for any new developments that could affect the price of oil.

Aussie Court Overturns Gas Exploration Blockade

In a surprise twist, the Federal Court of Australia has reversed the decision by former Prime Minister Scott Morrison to block a natural gas exploration license offshore Australia’s east coast. And it seems Morrison's refusal to allow exploration was deemed "biased."

Biased and denied 

Morrison's administration had denied Petroleum Exploration Permit PEP-11, causing the license holders, Asset Energy and Bounty Oil & Gas NL, to sue for bias and a breach of procedural fairness. Now, the Federal Court has agreed, quashing the decision and concluding that apprehended bias tainted the verdict.

Australia is a major LNG exporter

It can't be overstated how significant it is for the gas industry that exploration may proceed. And with the current gas crisis on the east coast, the ruling may pave the way for an increase in production to ease the strain.

The decision to overturn the gas exploration blockade is a victory for Asset Energy and Bounty Oil & Gas NL, and a potential boon for the gas industry in Australia. While it remains to be seen how the new government will approach the issue, one can only hope for timely and lawful re-consideration.

And hey, who knows, maybe Morrison will finally concede that natural gas can have a place in Australia's future energy mix.

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China Swoops in to Control Iraq's Oil

While the US and its allies fumble around for influence in Iraq, China is coming in hot, seizing control of the country's lucrative oil industry. Just recently, three Chinese and UAE firms were granted six oil concessions by Baghdad. Additionally, PetroChina is set to become the sole operator of the enormous West Qurna 1 oil field after ExxonMobil cut and ran.

West Qurna 1 is a monster oil field

It holds an estimated 43 billion barrels of recoverable reserves. Located close to southern Iraq's oil and export hub, Basra, the field originally held 9 billion barrels, but now boasts more than 20 billion barrels. The Ministry of Oil's goal is to raise crude oil production capacity from the current 450,000-500,000 bpd to over 700,000 bpd by 2025. To top it off, the cost of lifting crude oil from the field is a measly US$1-2 per barrel, the lowest in the world, alongside Iran and Saudi Arabia.

PetroChina takes over operations

While PetroChina and ExxonMobil each owned a 32.7% stake in West Qurna 1, China surreptitiously maneuvered its way to take complete control of the field. ExxonMobil was eventually nudged out, likely due to China's unscrupulous tactics, and concerns over its reputation being sullied by participation in the West Qurna 1 and Common Seawater Supply Project development contracts. China has been using this same approach in Iraq's neighboring Majnoon oil field, working hand-in-hand with Iran to divide the field into two supergiant fields, North Azadegan and South Azadegan.

It's clear that China is playing the long game to gain a stranglehold on Iraq's oil industry. By quietly working behind the scenes and using their trademark underhanded methods, China is swiftly becoming the dominant foreign player in the country.

Meanwhile, the US and its allies seem to be stumbling in their attempts to secure their own interests. Will China's shrewd tactics pay off in the end?

Around the Digital Patch

💰 Canadian firm makes 10X by sending NatGas to TX gulf coast.⚔️ Joint naval exercises between China, Russia, and South Africa.🤯 Guyana's offshore oil reserves could be insane.💴 China outspends on clean energy.

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