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Eni cuts scope 1, 2 upstream emissions by 40pc in 2023

  • Market: Crude oil
  • 15/05/24

Italy's Eni said today that it has cut its net scope 1 and 2 emissions in the upstream sector by 40pc in 2023, compared with a 2018 baseline.

Eni has also cut scope 1 and 2 emissions by 30pc for the whole business during the same period, it said. Scope 1 refers to emissions directly stemming from an organisation's activity, while scope 2 refers to indirect emissions from purchased energy.

The firm has a target to be net zero upstream for scope 1 and 2 emissions by 2030, and by 2035 for the whole company. It also has a goal of being net zero across all its businesses, including scope 3 emissions that are generated by use of its products, by 2050.

Eni said it agrees with the UN Cop 28 deal struck by almost 200 countries in Dubai last year, and for "the need for the energy transition to take place in a fair, orderly, just and pragmatic manner". But it added that this includes expanding its gas portfolio, as well as investing to reduce emissions from oil and gas output. It said investing in gas is "a bridging vector in the energy transition pathway", citing the acquisition of Neptune Energy and the start of LNG production in Congo (Brazzaville).

Eni completed the purchase of assets of gas-focused UK-based independent Neptune Energy in January.

The Cop 28 agreement acknowledges the need to transition away from fossil fuels in energy systems "so as to achieve net zero by 2050 in keeping with the science", but it also "recognises that transitional fuels can play a role in facilitating the energy transition while ensuring energy security". Some climate non-governmental organisations and countries particularly vulnerable to the effect of climate change have warned that this could create loopholes benefiting the development of fossil fuel resources, including natural gas.

Eni in March said that it has cut its spending plans by around 20pc through to 2027 as it looks to focus on the quality of upstream projects and streamlined development to grow its oil and gas production by an annual 3-4pc. "Natural gas will continue expanding its share of production," Eni chief executive Claudio Descalzi said. The firm is also looking to raise its renewable energy capacity to 4GW this year from 3GW at the end of last year, and then double this to more than 8GW by 2027.


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16/10/24

IEA sees steeper oil demand fall in long-term outlook

IEA sees steeper oil demand fall in long-term outlook

London, 16 October (Argus) — Long term global oil demand is set to fall by more than previously anticipated, according to the baseline scenario in the IEA's latest World Energy Outlook (WEO). The Paris-based agency's stated policies scenario (Steps), which is based on prevailing policies worldwide, sees global oil demand — excluding biofuels — falling to 93.1mn b/d in 2050, compared with 97.4mn b/d in last year's WEO. This is mainly because of lower-than-previously expected oil use in transportation, particularly in shipping. The Steps scenario still sees global oil demand peaking before 2030 at less than 102mn b/d, after which it falls to 2023 levels of 99mn b/d by 2035. This is mostly because of a rapid uptake of electric vehicles (EVs), reducing oil demand for road transport. EVs have displaced around 1mn b/d of gasoline and diesel demand since 2015 and are set to avoid 12mn b/d of oil demand growth between 2023 and 2035 under Steps, the IEA said. The latest Steps scenario shows China's pre-eminence in global oil demand growth is fading, as the world's second largest oil consumer shifts towards electricity. Steps sees Chinese oil demand growing by just 1.2mn b/d to 17.4mn b/d by 2030, and then falling to 16.4mn b/d by 2035 and to 11.8mn b/d by 2050. India overtakes China as the world's main source of oil demand growth in Steps, adding almost 2mn b/d by 2035 and 2.4mn b/d by 2050. But its oil consumption in 2050 of 7.6mn b/d will still be lower than China's in the same year. The IEA's latest baseline oil demand scenario widens the gap with producer group Opec, which sees oil consumption continuing to rise to 2050 "with the potential for it to be higher." Opec's World Oil Outlook (WOO) — released in September — bumped up its long-term oil demand forecast to 2045 by around 3mn b/d compared with its previous release. It extended its forecast period to 2050, when it put oil demand at 120mn b/d. That equates to a 27mn b/d difference between the IEA and Opec baseline oil demand scenarios in 2050. Binding contraction The IEA said the slowdown in oil demand growth in its Steps scenario puts major resource owners, such as Opec+ countries, "in a bind" as they face a significant overhang of supply. Global spare oil production capacity of around 6mn b/d is set to rise to 8mn b/d by 2030 if announced projects go ahead, it said. The Steps scenario sees global oil production falling from 96.9mn b/d in 2023 to 90.3mn b/d in 2050, with Opec increasing its share of output from 34pc to 40pc in the period. Steps sees US oil supply growth continuing to 2030 and then contracting by around 250,000 b/d a year on average between 2030-50. Brazil, Argentina and Guyana are seen adding more than 2.5mn b/d to supply by 2035. The WEO explores two other scenarios — the announced pledges scenario (APS) assumes government targets on emissions are met in full and on time, while the net zero emissions by 2050 (NZE) scenario lays a path to limit global warming to 1.5°C. Oil demand in 2050 in APS and in NZE is lower compared with last year's WEO. In APS, oil demand falls to 92.8mn b/d by 2030, 82mn b/d in 2035 and 53.7mn b/d by 2050 — with around 135mn more EVs on the road by 2035 compared with Steps. In NZE, oil demand falls to 78.3mn b/d by 2030, 57.8mn b/d by 2035 and 23mn b/d by 2050 — with 1.14bn more EVs on the road by 2035 compared with Steps. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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PetroChina offloads TMX crude pipeline commitment


15/10/24
News
15/10/24

PetroChina offloads TMX crude pipeline commitment

Calgary, 15 October (Argus) — PetroChina Canada is no longer a shipper on the 590,000 b/d Trans Mountain Expansion (TMX) crude pipeline, less than six months after Canada's newest pipeline went into service. The Chinese-owned refiner has parted with its commitment on the pipeline connecting Edmonton, Alberta, to Burnaby, British Columbia, according to a letter to the Canada Energy Regulator on 10 October. The project has helped Canadian crude producers reach new markets on the Pacific Rim, with China often singled out as a target. PetroChina Canada "has now assigned these agreements to another party and will not be a committed shipper going forward," the letter read, without disclosing the other company or reasoning. TMX roughly tripled the capacity of the Trans Mountain system to 890,000 b/d when it went into service on 1 May, but critics questioned how useful the expansion would be. Shippers were quick to dispel any concerns about the line's utilization by ramping up throughputs in the first few months of service. The latest official figures from Trans Mountain show 704,000 b/d was shipped in June , its first full month of operation. However, the expansion was riddled with construction delays and of concern is who will ultimately foot the bill for the C$35bn ($25bn) project's cost overruns — Trans Mountain or shippers through higher tolls. The original budget for the project was C$5.5bn when first conceived more than a decade ago with many of the shippers signing up for capacity around that time. The tolling dispute will continue into 2025 to determine what portion of the extra costs the shippers will be responsible for, with the regulator responsible for making the final decision. Interim tolls in place have the fixed costs for a heavy crude shipper with a 20-year term to move 75,000 b/d or more at about C$9.54/bl ($6.96/bl). "Shippers should not reasonably be expected to be subject to C$7.4bn (and counting) in cost growth without serious scrutiny of Trans Mountain's costs," lawyers in March this year told the CER on behalf of several shippers, including PetroChina. Trans Mountain says approximately 80pc of the TMX is backed by firm commitments with the balance saved for walk-up shippers. PetroChina Canada owns the MacKay River oil sands project in northeast Alberta which has produced about 10,000 b/d of bitumen from January to August this year, according to data from the Alberta Energy Regulator (AER). PetroChina Canada also owns the undeveloped Dover oil sands project, has a 50pc stake in the Grand Rapids oil sands pipeline, natural gas production in western Canada and a 15pc stake in the 14mn t/yr LNG Canada export facility. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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IEA points to oil stocks in case of supply disruption


15/10/24
News
15/10/24

IEA points to oil stocks in case of supply disruption

London, 15 October (Argus) — The world can draw on global oil stocks and rely on Opec+ spare production capacity in case of a supply disruption erupting from the conflict between Iran and Israel, the IEA said today. In its latest Oil Market Report , the Paris-based watchdog said it was "ready to act if necessary." It said IEA public stocks alone stood at over 1.2bn bl in addition to 500mn bl held under industry obligations. The IEA also said non-member China held 1.1bn bl of crude stocks, enough to meet 75 days of domestic refinery runs. The IEA co-ordinated two emergency stock releases in 2022 after Russia invaded Ukraine. The world's reliance on stocks would become more pronounced if any supply disruption extended beyond Iran's oil industry to include flows through the Strait of Hormuz. This would threaten most Opec+ spare production capacity of more than 5mn b/d as members such as Saudi Arabia, Iraq, Kuwait and the UAE are highly reliant on the waterway to export their oil. But as long as supply keeps flowing, the IEA said that the market faces a "sizeable surplus" next year. The agency's latest balances show a supply surplus of 1.11mn b/d in 2025, up by 50,000 b/d compared with its estimates last month. For this year, the agency now sees a slight surplus of 90,000 b/d, compared with a slight deficit last month. In the final quarter of this year, the IEA sees a surplus of around 200,000 b/d. Concerns over the strength of oil demand have been rising in recent months, with the IEA once again trimming its oil consumption forecast for this year. The IEA cut its 2024 global oil demand growth forecast by another 40,000 b/d this month to 860,000 b/d, with China once again the main driver. A slowdown in China's economy remains the key drag on oil consumption growth. The IEA sees China's oil demand this year increasing by 150,000 b/d compared with 180,000 b/d in its report last month. At the start of the year the agency was guiding for growth of 710,000 b/d from China. The IEA also downgraded its estimated growth from China for next year to 220,000 b/d from 260,000 b/d last month, despite the country's recently announced stimulus packages. For next year, the agency sees oil demand growth slightly higher at 1mn b/d, up by 40,000 b/d from last month's report. But growth for both 2024 and 2025 is set to remain well below 2023's post-pandemic surge in growth of just under 2mn b/d. On global supply, the IEA kept its growth estimate broadly unchanged at 660,000 b/d. But it expects global growth to be just above 2mn b/d next year even if all Opec+ cuts are maintained. Some members of Opec+ are due to start unwinding 2.2mn b/d of voluntary cuts starting in December — although this is dependent on market conditions. The IEA said that the 500,000 b/d fall in Opec+ crude production in September — led by Libya — could make it easier for the alliance to implement its plan to raise output, although healthy non-Opec+ supply growth next year will remain a concern. The agency said global observed oil stocks declined by 22.3mn bl in August, led by a 16.5mn bl draw on crude. It also said preliminary data showed stocks fell further in September. By Aydin Calik Global oil supply/demand balance mn b/d Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Guyana crudes pressured by end of Libya blockade, TMX


14/10/24
News
14/10/24

Guyana crudes pressured by end of Libya blockade, TMX

Houston, 14 October (Argus) — The restoration of Libyan crude production and an influx of heavy-sour Canadian grades to the US west coast has pressured light sweet Guyana crudes to their widest differential against Argus North Sea Dated since the assessments launched in February. Values for Guyana crudes Liza, Unity Gold and Payara Gold fell by 20-80¢/bl last week as offer levels fell swiftly. Liza reached a $1.20/bl discount against North Sea Dated, Unity Gold fell to a 35¢/bl discount and Payara Gold a 33¢/bl discount. Liza and Unity Gold fell to their lowest value since Argus began to assess the grades, while Payara Gold fell to its lowest level since mid-March. European refiners had turned toward Guyana after the 26 August start of the Libyan oil blockade , with imports rising by around 200,000 b/d to almost 456,000 b/d in September, according to data analytics firm Vortexa, reflecting the highest flows on that route since March. Libya has since recovered to more than 1mn b/d of production after the country's oil blockade ended on 3 October, according to data from state-owned oil company NOC published last week. Output in September was less than half of pre-blockade levels, with Libya's crude exports down to 460,000 b/d in that month compared with 1.02mn b/d in August, according to Kpler data. Projected October Guyana exports to Europe are 205,000 b/d lower than September at only 193,000 b/d, Vortexa data shows. TMX takeover Guyana prices also could be under pressure from added competition on the Americas Pacific coast from crude exported via the 590,000 b/d Trans Mountain Expansion (TMX) pipeline. In May, before the startup of TMX, Guyanese exports to the US totaled 68,000 b/d, data from Vortexa shows. Refiners did not purchase any Guyanese grades in June and August, and imports in July and September were more than halved from May levels at 32,000 b/d and 29,000 b/d, respectively. Vortexa estimates October deliveries will only amount to less than 29,000 b/d, a 57pc decrease since the start of TMX. TMX has quickly become a valuable crude source to US west coast refiners, displacing many Latin American grades in the process. Ecuadorean crude imports have trended lower since May, and were down by 30pc from June-September compared to a year earlier. Crude volumes arriving at Panama's PTP pipeline from Colombia — a common way US west coast refiners receive Colombian crude — have also trended lower since July. September crude receipts of Colombian grades into Panama have fallen from 173,000 b/d in July to 50,000 b/d in September. By Rachel McGuire and Joao Scheller Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Permian producers face new headwinds


14/10/24
News
14/10/24

Permian producers face new headwinds

London, 14 October (Argus) — Growing associated gas production and rising breakeven prices for new oil wells are creating fresh challenges for Permian producers. Oil output in the Permian basin in Texas and New Mexico is growing more slowly than expected. The EIA revised down forecasts for 2024 Permian production in this month's Short-Term Energy Outlook (STEO) following changes to historical output data. Permian production is now forecast to rise by 6.1pc this year and 3.6pc next, down from 7.8pc and 3.9pc, respectively, a month ago. Activity in the Permian oil and gas sector edged down in the third quarter, firms participating in the Dallas Fed Energy Survey say. Low Waha natural gas trading hub prices prompted about a third of 23 active exploration and production (E&P) firms to curtail production, and another third to either delay and defer drilling or well completions. Permian gas prices were negative — meaning that sellers pay buyers to take gas — for most of the six months before early September, as associated gas production exceeded pipeline capacity to move it to market. But Waha prices turned positive again last month as gas began to flow out of the region along the new Matterhorn Express pipeline. Deliveries on the 2.5bn cf/d (25bn m³/yr) Matterhorn pipeline have averaged about 600mn cf/d this month, Gelber & Associates analysts say. Flows are expected to ramp up to full capacity before the end of 2024, but robust associated gas production in the Permian remains a constant factor. The Permian basin now accounts for around a fifth of US natural gas production and is the fastest-growing source of new supply, as rising oil output adds increasing volumes of associated gas (see graph). The GOR — the average ratio of gas output ('000 cf) to oil production (bl) — in the Permian has increased from around 2 to over 3.5 since 2012, data from analysts Novi Labs show. The GOR for Permian wells typically rises during the life of a well. The GOR for Midland wells trebles from 1 to 3 after five years of production and nearly doubles for Delaware wells from just over 2 to just over 4. So the GOR inevitably rises as the share of legacy wells in overall output grows. Tiers for fears Firms are also using up the better drilling locations. Shale is not a uniform resource. Despite impressive advances in productivity over the past decade, rock quality remains the most important driver of well performance. Operators target high-quality (tier 1) wells first if they can, leaving lower-quality tier 2–4 wells for later, hoping that improvements in drilling and completion technology and efficiency will offset poorer yields. Less than two-fifths of the 25,000 drilling sites estimated to remain in the Midland basin offer a breakeven below $60/bl over a two-year period, according to a new assessment by Novi Labs using detailed rock quality data and incorporating the impact of infill well spacing patterns (see graph). Results reflect huge geologic variation within the basin and yield a weighted-average breakeven of $74/bl for the potential inventory of undrilled Midland wells. "Average tier 1 rock breaks even on average at $60/bl, but that number for tier 4 rises to $96/bl," Novi's Ted Cross says. For comparison, breakeven WTI prices for drilling a new oil well in the Midland basin ranged from $40-85/bl and averaged $62/bl, according to 87 E&P firms surveyed by the Dallas Fed in March (see graph). Over the past five years, average breakeven prices for new Midland oil wells from the Dallas Fed Energy Survey increased by a just over a third from $46/bl. In 2020, Midland breakeven prices ranged from $30-60/bl. Midland basin remaining well locations Permian oil and gas production Breakeven prices for new wells survey Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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