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US is ready to escalate Mexico energy dispute

  • Market: Crude oil, Natural gas, Oil products
  • 24/03/23

Washington is urging Mexico to take immediate steps to address concerns expressed by US energy investors and is ready to escalate the dispute, the top US trade negotiator has told US lawmakers.

The US Trade Representative's office (USTR) has asked Mexico to take "specific and concrete steps" to address the concerns set out in a July 2022 trade complaint, the agency's chief, Katherine Tai, said in briefings on Thursday and today before the Senate and House Representatives' committees handling trade. Pressed by lawmakers to lay out the next steps, Tai said that her agency was prepared to use every measure available under the US-Mexico-Canada free trade agreement (USMCA) — a reference to retaliatory tariffs that could be levied against imports from Mexico if the US' concerns are not satisfied.

The US and Canada last July filed a formal complaint under the USMCA against Mexico's energy policies, accusing Lopez Obrador's government of giving preferential treatment to state-owned enterprises and of taking actions that have hurt foreign investors. The complaint centers on Mexico's attempts to dial back the 2014 energy reform with laws to curtail private-sector renewable energy development, prioritize power dispatch from state utility CFE and nationalize natural gas supply under gas transport contracts.

The USMCA sets out a timeline of 30 days for consultations and another 75 days to form a dispute settlement panel to address specific concerns. But those deadlines have gone without any specific action taken by the US.

"American clean energy producers, [including] companies in the Pacific northwest, are still waiting for access," Senate Finance Committee chairman Ron Wyden (D-Oregon) told Tai. "In my view, it is long past time to say enough and make this a real dispute settlement case," said Wyden, whose committee oversees trade.

US and Canadian trade negotiators wrapped up formal consultations in September 2022 and held additional talks in December 2022-February 2023 to address specific issues raised by US and Canadian investors, Tai said. The US is making the case to Mexico that it should resolve the dispute because "it is in Mexico's own self-interest, in terms of the strength of its energy market and the integration of that market in North America," Tai said.

Senator Bill Cassidy (R-Louisiana) urged Tai to take advantage of punitive measures laid out by the USMCA. The Mexican government "seems to have a kind of nationalistic viewpoint in which they're willing to sacrifice efficiency and tolerate corruption in order to have the pride of owning their own business," Cassidy said.

US oil, power and manufacturing industry groups earlier this month asked the USTR to escalate the dispute.

Mexico has downplayed the accusations made by its main trading partners, in part because they stem from efforts by President Andres Manuel Lopez Obrador's government to roll back his predecessor's historic reopening of Mexico's energy sector to foreign investment.

Obrador's government has taken steps to partially address some of the concerns expressed by US investors. Energy regulator CRE resumed reviewing new permits for the energy sector earlier this month after a Covid-19-related shutdown of the process in 2020, but said it will take until September to address permits pending from 2019.

Lopez Obrador has also touted the Sonora Plan, announced during the Cop 27 climate talks in Egypt last November, which calls for the construction of a series of new wind and solar parks in Sonora and Oaxaca with US financial backing.


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12/07/24

Gas struggles hinder Brazilian industry: Study

Gas struggles hinder Brazilian industry: Study

Sao Paulo, 12 July (Argus) — A lack of natural gas supply is hindering 9pc of Brazil's industry, according to a study conducted by the country's industry confederation (CNI). According to CNI, 14pc of the Brazilian industry uses natural gas in its production processes, with 9pc reporting some sort of supply issue in the last 12 months. The study also showed that 10pc of industry have limited access to energy in general. Among those who do not use natural gas in the production process, 10pc point to the lack of access to energy as the main reason for choosing another energy source, 8pc blame the lack of distribution infrastructure, such as gas pipelines, and 5pc said prices are too high. The study provides some insight to the industry, but it may not paint the most accurate picture, given that gas usage is more intense in some specific sectors, CNI's energy policy and industry expert Rennaly Patricio Sousa said. Brazil's south holds the heaviest natural gas users in the country and its regional federations have been very active in advocating for a more competitive gas market. "The attraction of new investments to the south is related to the availability of gas," Santa Catarina state's industry federation president Glauco Jose Corte said on 10 July during an industrial forum. "Therefore, we need to discuss improvements in transport infrastructure, supply strategies, the entry of new players and the role of regulatory agencies." CNI's study makes it clear that low competition in the natural gas sector holds back both industry and consumers, making the Brazilian product more expensive and less competitive. Hence, lowering the price of natural gas is important to increase investments and revenues in sectors that are very dependent on it, such as the petrochemical industries, steel, ceramics, glass, aluminum and mining, the report said. The 2021 new gas law made room to reform the sector, but the market remains very concentrated, Sousa said. "So opening up the gas market is a good bet to help resume growth in the industry that consumes about 60pc of this energy." By Betina Moura Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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India to offer 25 oil, gas blocks in 10th round: Update


12/07/24
News
12/07/24

India to offer 25 oil, gas blocks in 10th round: Update

Mumbai, 12 July (Argus) — India will offer a total of 25 oil and gas blocks in the tenth bidding round in August or September, according to a senior Directorate General of Hydrocarbons (DGH) official. The offer will cover 13 sedimentary basins, including six onland blocks with an estimated area of 16,871km², six shallow water blocks covering 41,391km², one deepwater block of 9,991km², and 12 ultra deepwater blocks of 12,3733km², the DGH official said. India offered 136,596.45 km² in 28 upstream oil and gas blocks in the ninth bidding round under the Hydrocarbon Exploration and Licensing Policy's (HELP) Open Acreage Licensing Programme (OALP). The deadline for this round has been extended thrice , with the latest one to 31 August as the government wanted to provide much more granular data about the blocks to help upstream companies make a decision, DGH director-general Pallavi Jain Govil told reporters on the sidelines of an industry conference. India also extended the deadline for bids for a special upstream bidding round to 16 August from 15 July earlier. It had invited bids for two discovered small oil and gas fields located in the Mumbai offshore region and one coal-bed methane (CBM) gas field in West Bengal. The conclusion of the ninth round will have a key role to play in the launch of the tenth round as foreign participants have raised key issues with the oil ministry, including ones related to indemnity and compensation, a government official said. These issues have been holding back foreign firms from investing in India. With bigger blocks on offer, there are expectations that it will elicit interest from foreign participants as the government tries to resolve issues raised by these companies. The move by the government to provide more data to bidders by placing it in the National Data Repository is expected to reverse the tepid response in previous drilling rounds. It is not yet known if this round will elicit interest from foreign participants, as has mostly been the case in previous auctions. India's upstream licensing has largely been dominated by domestic participants. Indian state-controlled refiner ONGC in January bagged seven of the 10 areas in exploration blocks offered under India's eighth open acreage licensing policy drilling round. A private-sector consortium of Reliance Industries (RIL) and BP, state-controlled Oil India and private-sector Sun Petrochemicals received one block each. India's hydrocarbon exploration has been lacking because of slow policy implementation, despite its huge demand for oil and gas. The DGH is working to minimise the approval time to increase domestic production and decrease import dependency on oil and gas. Lackluster discoveries, shrinking exploration capital and a complicated tax regime have also limited foreign interest. The DGH has also started an efficiency department recently to focus on enhanced oil recovery techniques with the use of carbon capture, use and storage technology, Pallavi Jain said during a panel discussion. By Rituparna Ghosh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Japan’s Shikoku to shut Ikata reactor for maintenance


12/07/24
News
12/07/24

Japan’s Shikoku to shut Ikata reactor for maintenance

Osaka, 12 July (Argus) — Japanese utility Shikoku Electric Power is planning to shut down the 890MW Ikata No.3 nuclear reactor on 19 July, to carry out regular maintenance works. The absence of Shikoku's sole reactor could prompt the utility to boost thermal power generation at coal-, gas- and oil-fired units to meet expected rises in electricity consumption for cooling purposes during the peak summer demand season. The Ikata No.3 reactor is set to close for a three-month turnaround, after around 13 months of continuous operations. Shikoku plans to start test generation in the final phase of the maintenance on 30 September and complete the entire turnaround process on 25 October. The potential fall in nuclear output could theoretically increase LNG demand by 170,270t over August-September, assuming an average gas-fired generation efficiency of 50pc. Shikoku operates four thermal power plants, including the 1,385MW Sakaide gas- and oil-fired plant, 750MW Saijo coal-fired plant, 700MW Tachibanawn coal-fired plant and 450MW Anan oil-fed plant. Thermal capacity accounts for around 60pc of the utility's power portfolio. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Biden brushes aside calls to end candidacy


12/07/24
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12/07/24

Biden brushes aside calls to end candidacy

Washington, 12 July (Argus) — President Joe Biden said on Thursday he will not end his re-election bid despite calls from Democratic lawmakers and donors who have raised doubts about his ability to defeat former president and Republican nominee Donald Trump. "I believe I'm the best qualified to govern, and I think I'm the best qualified to win," Biden told reporters following the conclusion of a three-day NATO summit in Washington. "I beat [Trump] once, and I will beat him again." Biden's televised debate with Trump last month led some Democratic lawmakers to urge him to end his campaign, and even senior Democrats like former House of Representatives speaker Nancy Pelosi (D-California) suggested that Biden should decide soon whether to remain in the race. Biden in his debate, which he called a "stupid mistake," often appeared feeble and confused and struggled to clearly articulate his policy positions. But Biden appeared stronger and more coherent in his solo press conference on Thursday — the first since November — in part because he talked about his international initiatives, which he considers among his strongest policy strengths. Biden cited NATO's security support for Ukraine and his administration's efforts to achieve a ceasefire in Gaza among his accomplishments. During the NATO summit this week fellow leaders "made it a point in their statements to thank the US and to thank me personally for all that NATO has achieved," Biden said, as a counterpoint to Trump's frequent criticism of the military alliance. Biden acknowledged that his age and medical conditions have led him to curtail his work schedule, with no engagements after 8pm, even though several late evening events were on his agenda during the NATO summit. He appeared to blame his staff for putting too many events on his schedule. Biden earlier attributed his poor performance during the debate to two transatlantic trips in June, to attend the 80th anniversary of the Normandy landing in France and to participate in the G7 summit in Italy. Even with a clearly stronger performance today — Biden took multiple questions during an hour-long press conference that ended at 8:30pm ET — his tendency to misspeak will continue to fuel his critics. At a NATO event earlier today, Biden mistakenly introduced Ukrainian president Volodymyr Zelenskiy as Russian president Vladimir Putin, while NATO leaders watched uncomfortably. "I am better [than Putin]," Zelenskiy jokingly retorted, while Biden said he thought too much about how to "beat Putin." And Biden referred to vice president Kamala Harris as "vice president Trump" during the press conference. Harris is qualified to serve as president but "I am the most qualified person to run," Biden repeatedly said. "I am the qualified person to do the job to make sure that Ukraine will not fall, that Ukraine succeeds, that the European alliance stays strong." Biden said he would only drop out of the race if his staff told him polls "showed there's no way you can win." At the summit, NATO members decided to establish an organization formally tasked with coordinating military assistance and training for Ukraine's armed forces, rather than have the US alone lead the effort. Referencing Trump's criticism of NATO and frequent adoration of Putin, Biden said that the election "is much more than the political question — it's a national security issue." Biden referred to several unnamed NATO leaders who told him: "You've got to win. You can't let this guy come forward. It'd be a disaster." The NATO summit declaration also accused China of covertly assisting the Russian war effort by providing key components for weapons. The US previously threatened to impose sanctions against Chinese companies allegedly helping the Russian defense industry. "I'm not prepared to talk about the details of [potential new sanctions] in public," Biden said. "I think you'll see that some of our European friends are going to be curtailing their involvement" in China. Biden said he would not sit down to negotiate with Putin over Ukraine "unless Putin's ready to change his behavior." Hungary's prime minister Victor Orban met with Zelenskiy, Putin and Chinese president Xi Jinping earlier this month to discuss a possible Ukraine peace deal, and he plans to meet with Trump on Friday. The Biden administration has dismissed Orban's mediation as unhelpful. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Houston power outages creeping down toward 1mn


11/07/24
News
11/07/24

Houston power outages creeping down toward 1mn

Houston, 11 July (Argus) — Slightly more than 1mn Houston-area homes and businesses were without electricity Thursday afternoon as local power distribution company CenterPoint Energy continues to slowly restore service after Hurricane Beryl. The storm knocked out power to about 2.1mn customers on 8 July when it made landfall southwest of the city as a Category 1 hurricane. The pace of restoration of service to areas that include major oil refineries, petrochemical plants and an LNG export terminal has been seen by many in the region as far too slow. At 6:50mp ET on Thursday about 1.04mn customers were still without power, according to CenterPoint. The company estimates that about 1.2mn customers have had power restored so far, another 400,000 should be restored by the end of day Friday and another 350,000 by the end of day Sunday. The 2 Bcf/d (57mn m³/d) Freeport LNG terminal in Texas remained offline and without power on Thursday after it was shut down ahead of Beryl's landfall. The electric power sector accounts for about 45pc of Texas' gas use, and gas generates about 43pc of the state's electricity, according to the US Energy Information Administration. Spot gas prices at the Katy storage hub, a key natural gas market near Houston, averaged $1.715/mmBtu on Thursday, down by 7.2pc from the previous session but 5.2pc higher from the start of this week. The index began July at $1.97/mmBtu. By David Haydon Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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