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Newly agreed EU, Mercosur FTA faces uphill battle
Newly agreed EU, Mercosur FTA faces uphill battle
Montevideo, 6 December (Argus) — The EU and South America's Mercosur closed a free-trade agreement (FTA) nearly 25 years in the making, but there is still a long road to ratification. Uruguayan president Luis Lacalle and European Commission president Ursula von der Leyen announced the deal at a Mercosur summit in Montevideo, the Uruguayan capital. The presidents of the three other Mercosur founding members — Argentina, Brazil and Paraguay — were present. The FTA will remove tariffs on more than 90pc of goods among the members. Von der Leyen called the agreement a historic milestone that would benefit 700mn consumers. She said the agreement "is not only a trade agreement, but also a political necessity." Lacalle said "an agreement of this kind is not a magical solution, but an opportunity." Leaders recognized that the agreement still has major hurdles to clear as it requires approval from member states. The agreement will go to legal review and translation in the next month in view of its future signing, according to the Mercosur-EU declaration. While the Mercosur countries are in favor of the agreement, opposition is strong in France, Poland and several smaller EU states. Argentinian president Javier Milei, who supports the agreement, criticized Mercosur as a block. "Mercosur, which was born with the idea of deepening our commercial ties, ended up like a prison that does not allow its members to take advantage of their comparative advantages or export potential," he said. Van der Leyen said that more than 60,000 businesses, half of them small, export to Mercosur. The EU exported $59bn to Mercosur in 2023, while Mercosur's four founding members shipped $57bn to the EU. She also stressed the importance of EU investment in Mercosur, including in sustainable mining, renewable energy and sustainable forestry. Brazilian president Luiz Lula da Silva said during the summit that the region had to take advantage of its resources, including agriculture and energy. The four Mercosur countries are major food producers, including crops such as corn, soy and sugarcane, used for biofuels. Brazil is the world's top soy producer, while Argentina is third, Paraguay sixth and Uruguay in the 14th spot. Bolivia, which joined Mercosur in July, is the 10th producer. Brazil is a major mineral producer and Argentina is slowly beginning to strengthen its mining sector. It has the world's second-largest lithium resources. Argentina is also beginning to monetize its unconventional gas formation, Vaca Muerta, the second largest in the world with 308 trillion cf of reserves. It is working on different LNG projects, with a focus on exports to Europe. The Mercosur countries also have in common plans for low-carbon hydrogen production, which also see the EU as an export market for value-added products, such as fertilizers. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
UK fuel mix disclosure ‘no longer fit for purpose’
UK fuel mix disclosure ‘no longer fit for purpose’
London, 5 December (Argus) — UK company Smartest Energy presented a paper at today's RECS-led UK Rego Day seminar in London, calling for urgent reform of the electricity certification scheme to support decarbonisation goals. Smartest Energy is calling for a shift to full production and consumption disclosure, with generators receiving a certificate of origin for every MWh they send into the grid — regardless of the fuel source. This would allow renewable and non-renewable generation to be tracked and enable consumers to make informed decisions, the paper argues. Another proposal is to gradually move away from the current methodology for fuel mix disclosure, which is based on annual matching — this system effectively means consumption within a specific timeframe can be matched to output in any other period during the disclosure year. The paper suggests an initial shift to quarterly matching, followed by monthly and daily matching. Closer temporal alignment would "encourage investment in grid development and deeper decarbonisation", according to Smartest Energy. It would also give a clearer picture of seasonal and daily energy demand and the physical reality of electricity flows. The paper suggests that more transparency is particularly important now that European guarantees of origin (GOOs) are no longer recognised in the UK, and while electricity continues to flow from the continent through interconnectors. Argus assessments for non-biomass Regos generated in the current compliance period 23 (CP23) — April 2024-March 2025 — averaged £4.19/MWh in November, while CP23 biomass was assessed at an average of £3.88/MWh. In Europe, full disclosure has already been implemented in Austria, Switzerland and the Netherlands. Dutch GOOs tend to trade at a premium to the rest of the continent, with consumer preference for local certificates driving demand. France moved to monthly certificate matching at the beginning of 2021. By Giulio Bajona Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Shell, Equinor to create biggest UK producer: Update
Shell, Equinor to create biggest UK producer: Update
adds details throughout London, 5 December (Argus) — Shell and Norway's state-controlled Equinor plan to combine their UK upstream businesses into a joint venture to create the UK North Sea's largest oil and gas producer. The new business will produce more than 140,000 b/d of oil equivalent (boe/d) from 2025, the companies said. Bank analysts reckon growth projects will enable production to eventually increase beyond 200,000 boe/d. It marks the latest deal in a wave of consolidation in the the UK sector of the North Sea, including Italian firm Eni's deal earlier this year to merge its UK upstream assets with those of independent producer Ithaca Energy and UK company Harbour Energy's tie-up with Germany's Wintershall Dea last year . Shell and Equinor are following a similar 50:50 ownership structure and self-financing model that BP and Italy's Eni employed in Angola when they combined their offshore assets there to create Azule Energy in 2022 . The Shell-Equinor joint venture's assets will include Equinor's stakes in the Mariner and Buzzard fields, alongside Shell's interests in Shearwater, Penguins, Gannet, Nelson, Pierce, Jackdaw, Victory, Clair and Schiehallion projects. A consequence of the deal is that Shell, having walked away from Ithaca's contentious Cambo oil project in the UK's west of Shetlands area last year, will now be exposed to Equinor's equally controversial 300mn bl Rosebank project , which is currently under judicial review . If Rosebank goes ahead, it is likely to be the largest growth driver of the new company with around 70,000 boe/d of production from 2027. Although Shell's assets will contribute a greater share of the joint venture's production to begin with, Equinor's assets have greater growth potential. Through the new entity, Shell will also benefit from Equinor UK's £6bn ($7.6bn) of tax losses. "Equinor's higher UK tax loss position and growth potential offsets the higher current production in Shell's UK portfolio, hence the 50:50 split in ownership of the new company," Barclays analysts wrote in a note. The deal does not include Equinor's assets that straddle the UK's maritime border with Norway — Utgard, Barnacle and Statfjord. Equinor will also retain ownership of its UK offshore wind portfolio, as well as other low-carbon and gas storage assets. Shell will retain ownership of its interests in Scotland's Fife NGL plant and St Fergus Gas Terminal, as well as floating wind projects under development. It will also remain the technical developer of the Acorn carbon capture and storage (CCS) project in Scotland. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia’s Woodside inks Bechtel EPC for Louisiana LNG
Australia’s Woodside inks Bechtel EPC for Louisiana LNG
Sydney, 5 December (Argus) — Australian independent Woodside Energy has signed an engineering, procurement and construction (EPC) contract with US engineering firm Bechtel for its Louisiana LNG terminal located in the US Gulf region. Bechtel has maintained operations at the partially constructed site since Woodside took over the project in October, after acquiring US LNG developer Tellurian , with works to continue subject to a limited notice to proceed under contract revisions, Woodside said. The Louisiana LNG foundation development comprises phases 1 and 2, which total 16.5mn t/yr capacity across three trains. Originally named Driftwood, Louisiana has permitting for a total five-train, 27.6mn t/yr capacity, with a final investment decision (FID) for phase 1 planned for January-March 2025. "In a short period of time, we have completed the acquisition, secured competitive revised EPC pricing that covers all three trains and opened the data room with strong interest from potential project partners," chief executive Meg O'Neill said on 5 December. Analysts have identified Tokyo Gas as a potential project partner, with RBC Capital Markets' Gordon Ramsay describing Louisiana LNG as a "good fit" with the Japanese utility's strategy of diversifying long-term offtake and locking in US gas supply, most recently through its purchase of independent Haynesville shale producer Rockcliff Energy for $2.7bn last year. First LNG at Louisiana is expected ahead of the project's US Federal Energy Regulatory Commission approval, expiring on 30 June 2029, O'Neill told an investor call in July, saying such a timeframe was consistent with a first quarter of 2025 FID. Perth-based Woodside heralded its fully permitted status when it announced it would buy Tellurian in July . But the election of Donald Trump as US president means a pause on issuing LNG export permits to non-free trade agreement nations is expected to be lifted in 2025 . Under O'Neill, Woodside has moved to increase its exposure to Atlantic basin LNG, inking a sales and purchase deal with the 9.5mn t/yr Commonwealth LNG in addition to an offtake deal with the 17.4mn t/yr Corpus Christi LNG in 2014. This adds to its existing 10mn t/yr equity production on Australia's west coast. Louisiana LNG expenditure from December to the end of March will be $1.3bn, Woodside said, estimating forward costs for the initial stage will be $900-960/t, unchanged from the figure at acquisition. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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