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

• UK Wants To Import Electricity from… Africa

• Shale Patch Faces Shortage of Asset Buyers

• Tweet of the Day

UK Wants To Import Electricity from… Africa

The Brits are big fans of the energy transition.

Those who can still pay their energy bills, that is.

Now, they want to start importing electricity from Africa.

Because it would be cleaner.

The 1,000-mile cable

The idea, in short, a company wants to build lots of wind and solar in Morocco.

Then, it wants to build a 1,000-mile cable to take the electricity to the UK.

It sounds like a comedy, but the guy behind the idea is very serious.

“It was like, well, why is no one doing this?” he told the WSJ for a recent story.

Well, off the top of my head, there’s a very good reason no one’s doing it.

The cost will be enormous, and the payback period will be forever.

And that’s if there is enough cable, of all things.

Yep. There’s a cable shortage looming because of the demand for transmission lines.

Because of the transition.

So, about that cost? Construction alone would come in at $22-24 billion.

That’s not counting the wind and solar capacity.

And the Moroccan government’s cut in the whole thing.

Fantastical transition beasts

Subsea cables stretching several hundred miles exist.

But a thousand miles takes the whole subsea cable idea to a new level.

Of risk.

Sure, there are cables capable of carrying power over massive distances with minimal loss.

But the question, as always, is this: is it worth the money?

There’s also the issue of energy security in the home country.

Sweden recently refused to build a power cable to Germany.

It said higher exports of electricity would raise domestic prices.

Sweden is smart.

Hopefully, Morocco is smart, too.

Shale Patch Faces Shortage of Asset Buyers

Shale Patch Faces Shortage of Asset Buyers

After the M&A wave sweeping through the oil patch, a lot of assets may get stuck unsold.

There are only so many buyers with deep enough pockets.

And the sellers need those assets sold.

An awkward side effect of the shopping spree

Big Oil threw itself into acquisitions after its stellar 2022.

It had the money, and it had the expansion plans.

But it also had shareholder payout plans…

Which depends on asset sales.

Chevron, Conoco, and Oxy alone have promised to raise between $16 and $23 billion from asset sales.

The only question is who will buy the assets out for sale.

The answer is hard.

There are only so many big oil companies with the means to buy more assets.

Then there are the private equity firms.

But these are making exit after exit while the market is good.

Then again, some might decide to enter the shale patch.

Not the end of the world

Even if companies can’t sell all the assets they’d planned, it wouldn’t be a tragedy.

They’d need to tweak their asset divestiture targets.

It’s not exactly unheard of, after all.

Besides, shale is still hot—the main growth engine of U.S. oil output.

Big Oil may not sell all the assets it plans to sell, but it will definitely sell some.

Then it would just need to cough up the difference from somewhere else.

Then, as the market tightens, buyers will start popping out like mushrooms after a heavy rain.

Tweet of the Day

Thanks for reading today's Oil Patch!

Stay oily, my friend.

Two quick requests before you go:

• If you found this useful, forward this email to a friend to spread the word. 👇

• Take 1 second to answer the poll below 👇👇