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Reduce carbon, not fossil fuels: Exxon, Oxy CEOs

  • Market: Crude oil, Natural gas
  • 02/03/21

Reducing carbon emissions from fossil fuels, not the actual use of fossil fuels, offers the best way to combat climate change, the leaders of two of the largest US oil and gas producers said today.

ExxonMobil chief executive Darren Woods and Occidental Petroleum chief executive Vicky Hollub both stressed on separate panels during CERAWeek by IHS Markit that the world still needs oil and gas. So instead of attacking fossil fuels, they both argued, governments can mitigate global warming by helping the industry to develop carbon capture and storage technologies and strengthen markets where polluters buy and sell the rights to emit carbon.

"Let's focus on what the issue is," Woods said. "It's emissions."

President Joe Biden's decisions to temporarily freeze drilling in federal lands and waters and kill the Keystone XL pipeline have unnerved oil and gas producers. The government is also considering a tax on imported goods manufactured in countries that do not tax carbon.

In addition, ExxonMobil, which hosts its annual investors presentations tomorrow, has been under pressure by activist firm Engine No. 1 and the California state teachers pension fund to change its practices.

Although ExxonMobil recently announced a new business unit called Low Carbon Solutions, Engine No. 1 said the US major needs to simultaneously invest in clean energy projects and completely offset carbon emissions over the next 30 years like other producers have promised to do.

Woods told CERAWeek that ExxonMobil sees promise in hydrogen, but that energy source is still far from ready. But when it comes to carbon capture, he sees a number of factors coming together that makes the technology a realistic option: government support, better economics to scale, development of markets to price carbon, and venture capital firm investments.

ExxonMobil "can leverage those converging forces," he said.

Occidental is currently building what will be the world's largest carbon capture and storage plant in the Permian basin. The independent hopes to complete the construction of the plant, designed to remove and store 1mn metric tons/yr of CO2, by 2024.

Hollub said Occidental's carbon business, which also includes carbon capture and enhanced oil recovery, is getting close to operating as a self-sustaining, profitable business.

"We should not be talking about eliminating fossil fuels," she said. "We should be talking about eliminating emissions."

By Thomas Lee

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24/03/25

Estonian climate ministry to push for EU ETS 2 repeal

Estonian climate ministry to push for EU ETS 2 repeal

London, 24 March (Argus) — Estonia's parliament has granted the country's climate ministry a mandate to push for the repeal or postponement of the EU's second emissions trading system (ETS 2) covering road transport and buildings, scheduled to launch in 2027. The Estonian parliament's EU affairs committee granted the ministry a mandate to begin consultations with the European Commission and EU member states on repealing the EU ETS 2 directive, because of the administrative burden and uncertainty posed by transposing the measure. If Estonia fails to garner sufficient support, it will join existing proposals by the Czech Republic and Poland to postpone the introduction of the new system for two years. This additional time could be used to find a way to limit the burden of imposing the measure, the committee said. These proposals would require a qualified majority of EU member states to pass. If not adopted, Estonia's climate ministry would instead start negotiations to postpone the launch of the system to 2028 or exclude road transport from its scope. The committee approved the mandate — which followed positions submitted by the government and subsequent amendments and opinions by the parliament's environment and economic affairs committees — "after a long and heated political debate", its chairman Peeter Tali said. The commission last year adopted a supply cap of 1.036bn carbon allowances in 2027 for the new system, which will cover upstream emissions from fuel combustion in buildings, road transport and small industry not covered by the existing EU ETS. For the first three years of operation, the system will have a price cap of €45/t of CO2 equivalent, adjusted for inflation, which if surpassed for a period of two months would trigger the release of 20mn allowances from its market stability reserve. By Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Red Sea diversions resume, but few vessels affected

24/03/25
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24/03/25

Red Sea diversions resume, but few vessels affected

London, 24 March (Argus) — Some shipping is avoiding the Red Sea again after Yemen-based Houthi forces ended a brief ceasefire, but few returned to the route in the first place. Already one clean products tanker that loaded gasoil in the Mideast Gulf in the second week of March has diverted away from the Red Sea route, vessel tracking data show. The Sti Guard, which loaded 530,000 bl of gasoil from Qatar's Ras Laffan plant on 10 March, rerouted on 14-15 March to avoid the Gulf of Aden and Bab el-Mandeb strait. The ship is now taking the longer voyage around South Africa to discharge in northwest Europe in the second half of April. The diversion comes after the Houthis announced earlier this month that they were restarting attacks on commercial shipping in retaliation for Israel preventing humanitarian aid deliveries from reaching Gaza. The US reacted to the announcement by launching a series of airstrikes targeting Houthi forces in Yemen from 15 March. The Houthis claim to have attacked US military ships in response. Yet the swift increase in the threat level for ships transiting the Bab el-Mandeb strait between Yemen and Somalia is likely to have far less impact on oil trade than when the Houthis first began attacking commercial shipping in late 2023. Much of the shipping that avoided sailing past Yemen last year did not return when the Houthis declared their ceasefire in January. Around 275,000 b/d of clean products sailed through the Bab el-Mandeb strait in February towards the Suez Canal, up from 90,000 b/d in January, after the Houthis announced a reduction in vessel attacks. But this was still substantially below the 1mn-1.2mn b/d that was moving on that route before the Houthi strikes began. On the whole, the return to the Red Sea has been slow, as the cost of additional insurance can be enough to wipe out any savings made from the shorter journey, meaning that there are only a few vessels that could divert back around the Cape of Good Hope. Cape fears Taking the Bab el-Mandeb/Suez Canal route cuts out 16 days of voyage time from the Saudi port of Ras Tanura to Rotterdam. But the financial benefits are less clear-cut. Shippers would save $700,000 in vessel hire and fuel costs compared with the longer Cape of Good Hope route. But transiting the Suez Canal requires a $525,000 fee. And shippers also have to pay an extra war risk insurance premium of around $420,000 — 0.4pc of the hull and machinery value of the tanker — to go past Yemen and run the Houthi gauntlet. Even with a 50pc no-claims discount on this war risk premium, the transit and extra insurance fees still wipe out any savings made on the shorter route. At the same time, the economics of shipping diesel from Asian refineries to Europe are becoming less favourable. Singapore 10ppm gasoil swaps have climbed to trade $23/t below Ice Rotterdam gasoil futures from discounts of $30-35/t in late February (see graph). The limited financial profit could mean that charterers will not be anxious to return to using the Suez Canal and those that have done may quickly gravitate back to taking the longer way around southern Africa without suffering any particular financial impact. Some shippers are still happy to take the shorter route, despite the heightened threat of attack. At least two clean products tankers, the Al Dasma and Sea Star, remain on track to transit the Bab el-Mandeb strait. And tankers carrying Urals crude from Russia's European ports to India are likely to continue to move through the Red Sea. Of the 53 tankers currently transporting Urals, just one is going around South Africa, Kpler data show. It is possible some vessels which recently loaded Urals in the Baltic and Black Sea could still take the cape route. By John Ollett Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Electricity drove surge in energy demand in 2024: IEA

24/03/25
News
24/03/25

Electricity drove surge in energy demand in 2024: IEA

London, 24 March (Argus) — Electricity demand drove a jump in overall global energy consumption growth in 2024, lifting it well above the average pace of increase in recent years, energy watchdog the IEA said today. Global energy demand rose by 2.2pc in 2024 — higher than the average annual demand increase of 1.3pc between 2013 and 2023 — according to the Paris-base agency's Global Energy Review . Global electricity consumption rose by 4.3pc, driven by record-high temperatures that led to increased cooling demand, growing industrial consumption, the electrification of transport and from data centres and artificial intelligence, the IEA said. Renewables and nuclear covered the majority of growth in electricity demand, at 80pc, while supply of gas-fired power generation "also increased steadily", it said. New renewable power capacity installations reached around 700GW in 2024 — a new high — while renewable power sources and nuclear together made up 40pc of total generation in 2024, it said. Global gas demand rose by 2.7pc in 2024, with an increase in "fast growing Asian markets", the IEA said. It noted growth of more than 7pc and 10pc in China and India, respectively. But "growth in global oil demand slowed markedly in 2024", the organisation said. Oil demand rose by 0.8pc — compared with 1.9pc in 2023 — and oil's share of total energy demand fell below 30pc last year "for the first time ever". A rise in electric vehicle (EV) purchases was a key contributor to the drop in oil demand for road transport, and this offset "a significant proportion" of the rise in oil consumption for aviation and petrochemicals, the IEA said. The rate of increase in coal demand slowed to 1.1pc in 2024, half the pace seen in 2023. "Intense heatwaves" in China and India "contributed more than 90pc of the total annual increase in coal consumption globally", for cooling needs, the IEA found. Renewables limit rise in emissions The IEA repeatedly noted the significant effect that extreme weather in 2024 had on energy systems and on demand patterns. Last year was the hottest ever recorded, beating the previous record set in 2023. "Weather effects contributed about 15pc of the overall increase in global energy demand", the IEA said. Global cooling degree days were 6pc higher in 2024 on the year, and 20pc higher than the 2000-20 average, it said. But the "continued rapid adoption of clean energy technologies" restricted the rise in energy-related CO2 emissions, which fell to 0.8pc in 2024 from 1.2pc in 2023, the IEA said. Energy-related CO2 emissions still hit a record high of 37.8bn t in 2024, but the rise in emissions was lower than global GDP growth, it said. "The majority of emissions growth in 2024 came from emerging and developing economies other than China," the IEA said. Emerging and developing economies accounted for more than 80pc of the increase in global energy demand last year, it said. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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US strikes Houthis with eye on Iran — to what end?

21/03/25
News
21/03/25

US strikes Houthis with eye on Iran — to what end?

Stoking regional tensions to get Tehran to the negotiating table appears unlikely to have Trump's desired outcome, write Nader Itayim and Bachar Halabi Dubai, 21 March (Argus) — As US president Donald Trump's administration intensifies its military campaign against Yemen's Houthis, it has issued yet another stark warning to Iran and its leadership — end support for the rebel group or face "dire" consequences. The ultimatum is in line with the ‘maximum pressure' approach Trump has adopted to force Iran back to the negotiating table. But success looks far from certain. This past week saw US forces carry out a series of air strikes against Houthi targets, soon after the rebel group said it would restart attacks on Israeli ships passing through the Red Sea and Arabian Sea, the Bab el-Mandeb strait and Gulf of Aden after Tel Aviv ignored a Houthi warning to resume the flow of humanitarian aid into Gaza. The Houthi threat since late 2023 has severely curtailed international shipping lanes in the Red Sea, impacting the global economy. The Trump administration says its campaign has set out to put an end to that. The US' "economic and national security has been under attack by the Houthis for too long", Washington says. And rising shipping rates, as a result, have probably increased global consumer goods inflation by 0.6-0.7pc, according to the White House. The diversion of oil and LNG flows has been stark (see charts). Trump's message to the Houthis is that their "time is up". Although Trump's predecessor, Joe Biden, also carried out air strikes against the group, observers say the latest attacks are not just more of the same. "Is this a different campaign? 100pc it is," says Mohammed al-Basha, founder of the US-based Basha Report security advisory. Some sites targeted in the Houthi-held capital Sana'a are "a first", he says, signalling that the Houthi leadership is now firmly in Washington's crosshairs for the first time since 2015, he says. The current campaign is also more proactive than the strikes that took place last year, says general Joseph Votel, a former commander of US Central Command, which is overseeing the attacks. "Last year, our approach was more defensive, and focused on protecting ships passing through the area," he says. But this campaign is larger in scope, more geographically dispersed and more intense. Votel says the Trump campaign is more "counter-terrorism focused", which indicates a more targeted and sustained approach to degrade Houthi capabilities and put pressure on its network. Also, there is a subtle change in the strategic messaging, according to Votel. While the Biden administration mostly focused on preventing an expansion of the regional conflict, the Trump administration is making clear that its focus is on "restoring freedom of commerce and navigation". While slight, this change "takes us from a defensive posture to an offensive one", he says. Threats and opportunities Arguably, the biggest distinction between the two strategies is the degree to which Iran, the Houthis' main backer, appears to have featured in the administration's calculations before launching this latest campaign. "The hundreds of attacks being made by [the] Houthis… all emanate from, and are created by, Iran," Trump wrote via his social media platform on day three of the strikes, by which point the Houthis had claimed two retaliatory attacks on the USS Harry S Truman aircraft carrier in the Red Sea. "Every shot fired by the Houthis will be looked upon, from this point forward, as being a shot fired from the weapons and leadership of Iran, and Iran will be held responsible, and suffer the consequences, and those consequences will be dire!" This kind of tough-talking rhetoric is in keeping with Trump's strategy of applying pressure on Iran's leadership to the point that it has no choice but to negotiate the future of its nuclear programme, and ideally, more than that. "It's very clear the US wants to see sweeping concessions from Iran on the nuclear file, on the regional proxy file, and probably the missile and drone programme," says Gregory Brew, senior analyst at US consultancy Eurasia Group. "Trump ultimately wants a deal. But he also wants to look tough and push the Iranians into a deal that aligns with his maximalist view." After Iran's other regional proxies — Gaza-based Hamas and Lebanese Hezbollah — saw their capabilities heavily degraded at the hands of Israel last year, the Houthis are one of the last remaining pieces in what Tehran calls its regional ‘Axis of Resistance'. In a letter sent to Iran's supreme leader, Ayatollah Ali Khamenei, earlier this month, Trump says he encouraged Iran's ultimate decision maker to "make a deal" or face military action. Iran has since confirmed receipt of the letter, but is yet to formally respond, with foreign minister Abbas Araqchi saying this week that its contents are still being evaluated. "Trump's letter is mostly a threat, but he also claims it has opportunities. We are evaluating it and paying attention to all points," he says. Iran's response "will not take long", Araqchi says. But the mood music coming out of Tehran over the past two weeks has not been positive. "You've had Khamenei's tough rhetoric, laying out a tough line for everybody that [they] are not going to talk to the US," Brew says. But "Araqchi and others have clarified that what they are really pushing back against is the sense of talking under pressure. They don't want to appear as if they are succumbing to Trump's pressure. They do want to talk, but from a position of relative strength". Carrot and multiple sticks So long as Washington continues to turn the sanctions screw on Iran — just this week the Treasury for the first time imposed sanctions on a small Chinese refiner over its purchases of Iranian crude — prospects for de-escalation, or nuclear diplomacy, look slim. This raises the question — what next? For now, Trump's inferred threats of military action against Iran look premature, says Arman Mahmoudian, a research fellow at the Global and National Security Institute, especially in response to Houthi actions. Trump seems to be "employing a Reagan-era ‘peace-through-strength' strategy… focused on demonstrating force, particularly by targeting the Axis of Resistance, which is currently in a fragile position", Mahmoudian says. "By launching the strikes, Trump is signalling he has both the capability and willingness to escalate if necessary. That said, I feel his ultimate goal is negotiations, not full-scale war." Brew agrees, describing the Houthis as "an easy target". They "have been redesignated a terrorist organisation [by the US] and are in an entrenched position. So bombing them gives this administration the chance to look tough, and appear to be applying pressure on Iran, without having to take action directly". But if Washington expects such military action against the Houthis to trigger a change in posture or behaviour from the Iranians, they might be disappointed. "The Iranians won't really care if the Houthis are getting bombed. [The group has shown] over the years that they can absorb these kinds of attacks," Brew says. "But also, Iran doesn't have the same influence over, or relationship with, the Houthis as it does Hezbollah or the Shia militias in Iraq." The commander-in-chief of Iran's Islamic Revolutionary Guard Corps has suggested as much, insisting this week that the Houthis "make their own strategic decisions" and that Iran "has no role" in determining their policies or activities. With both sides seemingly keen to talk, a return to negotiations in the not-too-distant future cannot be ruled out. But the sudden escalation of tensions in the Mideast Gulf region, following the collapse of the ceasefire in Gaza, will almost certainly make things more difficult than they already were. Oil flows through Suez Canal LNG flows through Suez Canal Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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Opec+ overproducers outline new compensation plans

21/03/25
News
21/03/25

Opec+ overproducers outline new compensation plans

London, 21 March (Argus) — Seven Opec+ members have submitted plans to the Opec secretariat detailing how they intend to compensate for producing above their crude production targets since January 2024. The plans show that Iraq, Kazakhstan, Russia, the UAE, Kuwait, Oman and Saudi Arabia will reduce their combined output by an average of 263,000 b/d over the 15 months to June next year (see table) . This is to compensate for exceeding their production targets by a cumulative 4.203mn b/d between January 2024 and February 2025. This figure does not represent a monthly average, but rather the sum of the monthly volumes by which the group's overproducers have surpassed their respective output ceilings. It works out to an average monthly overproduction of 300,000 b/d in the same period. If implemented fully, these compensation related cuts would partly offset a plan by these seven members plus Algeria to return 2.2mn b/d of voluntary production cuts starting in April over 18 months. In fact, the scheduled output increases for April and May would be entirely wiped out. But there is no guarantee the compensation related cuts will be delivered. Some members, Iraq and Kazakhstan in particular, have largely failed to deliver on past commitments to reduce output to below their production targets. By Aydin Calik Opec+ overproduction compensation plan* Iraq Kuwait Saudi Arabia UAE Kazakhstan Oman Russia Total Mar-25 116 15 38 5 25 199 Apr-25 116 8 9 5 53 7 51 249 May-25 135 15 6 10 57 10 76 309 Jun-25 130 23 10 72 12 102 349 Jul-25 120 30 10 66 14 127 367 Aug-25 115 38 10 81 18 152 414 Sep-25 120 27 10 85 20 173 435 Oct-25 120 10 90 13 233 Nov-25 120 20 84 224 Dec-25 120 20 49 189 Jan-26 123 33 39 195 Feb-26 123 33 38 194 Mar-26 123 33 40 196 Apr-26 123 50 38 211 May-26 125 55 42 222 Jun-26 125 56 36 217 Average reduction 262.7 *the amount by which members pledge to produce below their existing targets each month Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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