Good morning, here's what the Oilman has for you today:

• Europe, U.S. Will Rely on China for Diesel This Winter

• As Western Banks Shun Africa Oil, Chinese, Local Players Step In

• Upcoming Oil and Gas Events

• Tweet of the Day

Europe, U.S. Will Rely on China for Diesel This Winter

A couple of years ago, our media mocked China’s refinery buildout.

Those refineries, analysts said, were going to turn into stranded assets in a second.

Well, guess what: China will be supplying Europe and the U.S. with diesel.

From those stranded assets.

How did we get to this?

It was pretty simple, actually.

Refiners in Europe and the U.S. have been shutting down refineries like there’s no tomorrow.

One driver was the pandemic, which decimated oil demand.

Some refiners couldn’t make it.

Others jumped the transition bandwagon and converted their refineries into biofuel plants.

Politicians looked on and clapped.

Now, we’re getting dependent on China for nothing less than diesel—the fuel every economy operates on.

We are relying on China to make sure we have enough diesel and heating oil for the winter.

How’s that for a twist?

Who could have guessed it would turn that way?

Those same politicians who were encouraging the conversion of refineries into biofuel plants are now calling for less reliance on China.

But what we are getting is the opposite.

We are getting more dependent on that country.

Because it built refineries while we were closing ours.

It was totally impossible to predict how things will turn out, right?

But sure, tell us how China’s massive refinery capacity was stranded assets.

And how we don't need so many refineries at home.

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As Western Banks Shun Africa Oil, Chinese, Local Players Step In

Africa is home to much of the undeveloped global oil and gas reserves.

These are reserves the world will need.

Yet Western banks have refused to finance such projects because they are very virtuous.

It’s all right, though.

Commodity traders and African and Chinese lenders are happy to help.

Nature abhors a vacuum

Last year, when Europe was struggling to keep the lights on, it kept glancing at Africa.

With massive untapped oil and gas reserves, the continent was a natural pick for future suppliers.

Only international banks want nothing to do with oil and gas projects.

Enter commodity traders, Chinese banks, and African banks.

Apparently, all these players are only too happy to finance new oil and gas production.

Trafigura, for example, has a money-for-future-production deal with the companies it funds.

Canadian-based Africa Oil Corp. only works with African banks now.

Nature always finds a way, and the oil industry is no exception.

Securing long-term supply

There is a shrinking pool of untapped oil and gas resources around the world.

Africa is part of this pool, and it is not as politically controversial as Iran or Russia.

But, of course, the transition leaders want nothing to do with oil and gas.

Or rather, they will want nothing to do with oil and gas in a couple of decades.

For now, they are still using them because, well, there’s no alternative.

What these leaders—and the banks that listen to them—pretend not to realize is that there won’t be an alternative to oil and gas for many more decades.

That’s why African and Chinese banks are funding oil and gas in Africa.

That’s why Trafigura is doing it.

Upcoming Oil & Gas Events

• October 16-18: SPE Annual Technical Conference and Exhibition, San Antonio, TX

• October 16-18: IOGCC Annual Conference, Park City, UT

• October 17-19: Permian Basin International Oil Show, Odessa TX

• October 19: PIOGA Annual Membership Meeting & Reception, Canonsburg, PA

• November 1: Oil and Gas Electrification Symposium, Longmont, CO

• November 2: LOGA State Industry Series, Benedict’s Plantation, Mandeville, LA

Around the Global Patch

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🇷🇺 Maduro's Moscow visit strengthens Russia-Venezuela energy ties.

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