Banananomics: Both Clean And Dirty Energy Gets A Push

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.

U.K. Prime Minister Rishi Sunak has promised billions more for defense to counter threats from "an axis of authoritarian states."

Inputs that matter: Sunak said U.K. military spending would rise to 2.5% of national income by 2030, hardening a previous spending pledge.

• German prosecutors on Tuesday said police had arrested an employee of the far-right Alternative for Germany (AfD) political party on suspicion of espionage.

• Jian G. is an assistant to Maximilian Krah, the AfD's top candidate for the European Parliament elections. 

• In January, Jian is said to have repeatedly passed on information about negotiations and decisions in the European Parliament to his Chinese handler.

• "He is accused of an especially severe case of working for a foreign secret service," said a prosecution statement.

The opportunity: Germany currently hosts the most significant number of U.S. forces in Europe, followed by Italy and the U.K.

• A 2012 Northrop Grumman fellow and later a 2018 Lockheed Martin fellow recommended that the Defense Department consider revising the International Traffic in Arms Regulations, which governs the sales and export of military equipment to foreign countries.

• The Quincy Institute report found that the "most self-serving company" seeking to loosen arms sales restrictions was the European Aeronautic Defence and Space Company, now known as Airbus. Airbus's 2010 fellow urged the Defense Department to work with Congress and the State Department to ease foreign military sales restrictions and modify the "criteria for which export licenses are required."

Zoom in: Meanwhile, in the U.S., Brown University researchers found that the Defense Department spent more than $14 trillion since the U.S. invasion of Afghanistan and warned that "exaggerated estimates of the military challenges posed by China have become the new rationale of choice in arguments for keeping the Pentagon budget at historically high levels."

• The Department of Defense has used taxpayer money to send elite military officers to work for some of the Pentagon's top private contractors for nearly thirty years.

• The public-private arrangement has allowed corporate lobbying disguised as policy recommendations to reach the highest branches of the Defense Department, according to a report from the Quincy Institute for Responsible Statecraft.

• From 1995 to 2021, more than 315 military officers with elite ranks as high as colonel and rear admiral have been placed at top weapons manufacturers such as Boeing, Raytheon, and Lockheed Martin, as well as other companies with billion-dollar government contracts.

Between the lines: U.K. Defense Secretary Grant Shapps declared that the North Atlantic Treaty Organization (NATO) should increase its defense spending target for member countries to 2.5 percent of GDP.

• NATO was founded in 1949 and is a group of 32 countries from Europe and North America that exists to protect the people and territory of its members.

• "We're now saying we think that should be 2.5 percent," Shapps told Sky News. "We think that would make sense in a more dangerous world."

• NATO countries are currently expected to spend 2 percent of their GDP on defense, with 18 members currently on track to do so. Germany hit that target for the first time this year.

Follow the money: Germany said on Wednesday it plans to resume cooperation with the U.N. agency for Palestinian refugees (UNRWA), signaling a resumption of funding that was frozen after Israel accused 12 UNRWA staff of participating in the Hamas-led Oct. 7 attack.

• The allegations prompted 16 donor states, including the biggest, the United States, to freeze some $450 million of funds, a blow to UNRWA's operations as it grapples with the humanitarian crisis unleashed by Israel's assault on Gaza.

• The White House says it will "have to see real progress" before restoring its funding to the United Nations agency for Palestinians.

• The U.S. is expected to impose sanctions on a unit of the Israeli military accused of human rights violations in the occupied West Bank, a move that Israeli leaders have vowed to reject and decried as "the height of absurdity."

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