Houthi missiles hit bulk carrier in Red Sea: Update
Yemen-based Houthi militants launched five anti-ship ballistic missiles in the Red Sea on 28 May, with three striking the Greek-owned and operated bulk carrier Laax, US Central Command (Centcom) said today.
But the Marshall Islands-flagged Laax is continuing its voyage with no injuries reported. The vessel had unloaded about 60,000t of soybean meal at the Turkish port of Ceyhan on 21 May and is now ballasting to Imam Khomeini port in Iran, according to data from global trade and analytics platform Kpler.
Centcom forces have destroyed more than 10 uncrewed aerial systems over the Red Sea in the past week, after determining that they presented "an imminent threat to merchant vessels in the region". The systems were launched from a Houthi-controlled area of Yemen. The Houthis have launched five other anti-ship ballistic missiles since 18 May when a Houthi missile hit an oil tanker.
Houthi military spokesman Yahya Saree said today that the group had carried out six military operations, three of which were in the Red Sea.
Saree referenced the Laax as one of the vessels targeted with ballistic missiles and drones, and said it had been "hit directly and greatly damaged." He also named the Morea, a Malta-flagged bulk carrier, and the Sea Lady, a Marshall Islands-flagged bulk carrier, as two other ships that were targeted in the Red Sea, although no mention was made of a direct hit.
He separately said the Houthis had targeted two "American" vessels ꟷ the Alba and Maersk Hartford ꟷ in the Arabian Sea, again with "missiles and drones", and also the Minerva Antonia in the Mediterranean Sea with "winged missiles." Again, there was no mention as to whether they were hit.
Oil prices are rising as the conflict in the Middle East widens. An Egyptian soldier was killed in a clash with Israeli forces at the Rafah border crossing between Gaza and Egypt earlier this week. The Egyptian Armed Forces are investigating the incident, spokesperson Ghareeb Abdel Hafez said on 27 May. "A dialogue is taking place with the Egyptian side," the Israel Defense Forces (IDF) said.
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Yemen warring factions reach UN-mediated financial deal
Yemen warring factions reach UN-mediated financial deal
Dubai, 25 July (Argus) — The UAE today welcomed a UN-mediated agreement between Yemen's warring factions that could allay economic woes in the impoverished country. The UAE's ministry of foreign affairs hailed the 23 July announcement of an agreement between the internationally recognised Yemen presidential leadership council (PLC) and the Houthi militant group "with respect to airlines and the banking sector." The UAE, alongside Saudi Arabia, support the PLC. The agreement stipulates "cancelling all the recent decisions and procedures against banks by both sides and refraining in the future from any similar decisions or procedures," and calls for the resumption of Yemenia Airways' flights between Sana'a and Jordan at three a day and operating flights to Cairo and India "daily or as needed." The deal was reached two days after Israeli jets bombed the Houthi-controlled Red Sea port of Hodeidah. The internationally-recognised central bank in Aden in April ordered financial institutions to move their main operations from Houthi-held territory within 60 days or face sanctions. That deadline ran out in June, leading to a ban on dealing with six banks whose headquarters remained in Houthi-held Sana'a. The Houthis retaliated by taking similar measures against banks in PLC-held areas and seized four Yemenia Airways planes at Sana'a airport. The PLC said it hoped the Houthis would also meet a commitment to resume crude exports. Yemen's crude production collapsed soon after the start of the country's civil war, from around 170,000 b/d in 2011-13 to 50,000-60,000 b/d in 2022, according to the BP Statistical Review of World Energy. Data from analytics firm Kpler suggests Yemen has not exported any crude since October 2022. Threats yield results The Iran-backed Houthis earlier in July threatened to attack vital infrastructure such as airports and ports in Saudi Arabia, holding Riyadh responsible for decisions taken by Aden's central bank. The Houthis struck central Tel Aviv on 19 July, inviting an Israeli retaliation that took out a power station that supplies the Red Sea coastal city of Hodeidah and its port and fuel tanks, which are controlled by the Houthis. A breakthrough in the UN-mediated talks between the PLC and the Houthis resulted in the agreement on 22 July, a possible sign that Riyadh might have compromised to avoid a Houthi escalation. The Houthis have been attacking commercial ships in and around the Red Sea since November last year, six weeks after the breakout of the Israel-Hamas war, in what they say is an act of solidarity with Palestinians in Gaza. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Refining, LNG segments take Total’s profit lower in 2Q
Refining, LNG segments take Total’s profit lower in 2Q
London, 25 July (Argus) — TotalEnergies said today that a worsening performance at its downstream Refining & Chemicals business and its Integrated LNG segment led to a 7pc year-on-year decline in profit in the second quarter. Profit of $3.79bn was down from $5.72bn for the January-March quarter and from $4.09bn in the second quarter of 2023. When adjusted for inventory effects and special items, profit was $4.67bn — slightly lower than analysts had been expecting and 6pc down on the immediately preceding quarter. The biggest hit to profits was at the Refining & Chemicals segment, which reported an adjusted operating profit of $639mn for the April-June period, a 36pc fall on the year. Earlier in July, TotalEnergies had flagged lower refining margins in Europe and the Middle East, with its European Refining Margin Marker down by 37pc to $44.9/t compared with the first quarter. This margin decline was partially compensated for by an increase in its refineries' utilisation rate: to 84pc in April-June from 79pc in the first quarter. The company's Integrated LNG business saw a 13pc year on year decline in its adjusted operating profit, to $1.15bn. TotalEnergies cited lower LNG prices and sales, and said its gas trading operation "did not fully benefit in markets characterised by lower volatility than during the first half of 2023." A bright spot was the Exploration & Production business, where adjusted operating profit rose by 14pc on the year to $2.67bn. This was mainly driven by higher oil prices, which were partially offset by lower gas realisations and production. The company's second-quarter production averaged 2.44mn b/d of oil equivalent (boe/d), down by 1pc from 2.46mn boe/d reported for the January-March period and from the 2.47mn boe/d average in the second quarter of 2023. TotalEnergies attributed the quarter-on-quarter decline to a greater level of planned maintenance, particularly in the North Sea. But it said its underlying production — excluding the Canadian oil sands assets it sold last year — was up by 3pc on the year. This was largely thanks to the start up and ramp up of projects including Mero 2 offshore Brazil, Block 10 in Oman, Tommeliten Alpha and Eldfisk North in Norway, Akpo West in Nigeria and Absheron in Azerbaijan. TotalEnergies said production also benefited from its entry into the producing fields Ratawi, in Iraq, and Dorado in the US. The company expects production in a 2.4mn-2.45mn boe/d range in the third quarter, when its Anchor project in the US Gulf of Mexico is expected to start up. The company increased profit at its Integrated Power segment, which contains its renewables and gas-fired power operations. Adjusted operating profit rose by 12pc year-on-year to $502mn and net power production rose by 10pc to 9.1TWh. TotalEnergies' cash flow from operations, excluding working capital, was $7.78bn in April-June — an 8pc fall from a year earlier. The company has maintained its second interim dividend for 2024 at €0.79/share and plans to buy back up to $2bn of its shares in the third quarter, in line with its repurchases in previous quarters. By Jon Mainwaring Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australian coal rail line to shut for 2 weeks: Coronado
Australian coal rail line to shut for 2 weeks: Coronado
Sydney, 25 July (Argus) — The Blackwater rail line in Queensland, Australia will be closed for up to two weeks because of maintenance, which will restrict coal deliveries to the key port of Gladstone. The maintenance program will run from late July to early August, coal mining firm Coronado said on 25 July. This is limiting metallurgical supply from Queensland and pushing up the price of pulverised coal injection (PCI) coal relative to Australian premium low-volatile coal, it added. The two-week shutdown was planned before Coronado released its 16.4mn-17.2mn t saleable coal guidance for 2024 , which it still expects to reach despite a week-long outage on the Blackwater line in June-July following a collision . Shippers appear prepared for the reduction in shipping from the 102mn t/yr Gladstone port over the next couple of weeks, with just 12 ships queued outside the port on 25 July, down from 23 on 6 June and below-average queues of around 20. Coal is delivered to Gladstone through the 100mn t/yr capacity Blackwater rail line and the 30mn t/yr capacity Moura line, both of which are operated by Australian rail firm Aurizon. Gladstone's shipments fell by 9.5pc in June compared with a year earlier, partly because of rail constraints. Around two-thirds of Gladstone's coal shipments are metallurgical coal and a third are thermal. A fire at UK-South African mining firm Anglo American's Grosvenor mine already hit Australian metallurgical coal exports, which led the firm to cut its 2024 production guidance to 14mn-15.5mn t from 15mn-17mn t. The premium for premium hard coal prices over PCI coal prices has shrunk to around $30/t from $145/t over the past six months. Argus last assessed the premium hard low-vol price at $224/t fob Australia on 24 July, with the PCI low-vol price at $193.65/t. Aurizon and Gladstone Port were contacted for comment, but have yet to respond at the time of writing. By Jo Clarke Australian coal price comparisons ($/t) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Feedstock imports shake up US biofuel production
Feedstock imports shake up US biofuel production
New York, 24 July (Argus) — Waste from around the world is increasingly being diverted to the US for biofuel production, helping decarbonize hard-to-electrify sectors like trucking and aviation. But as refiners turn away from conventional crop-based feedstocks, farm groups fear missing out on the biofuels boom. Driven by low-carbon fuel standards (LCFS) in states like California, US renewable diesel production capacity has more than doubled over the last two years to hit a record high of 4.1bn USG/yr in April according to the Energy Information Administration. Soybean and canola processors have invested in expanding crush capacity, expecting future biofuels growth to lift vegetable oil demand. But policymakers' growing focus on carbon intensity, a departure from the long-running federal renewable fuel standard (RFS) that sets volume mandates for broad types of fuel, primarily benefits waste feedstocks, which generate larger LCFS credits because they are assessed as producing fewer emissions. Argonne National Laboratory's GREET emissions model, which has been modified by federal and California regulators for clean fuels programs, factors in emissions sources like fertilizers and diesel use on farms for virgin vegetable oils but not for used oils sourced from cooking operations. Refiners trying to maximize government subsidies are thus sourcing waste-based feedstocks from wherever they can find them. Through May this year, imports to the US under the tariff code that includes used cooking oil (UCO) and yellow grease rose 90pc from year-prior levels to more than 1.8bn lb (844,000t). While China represents most of that, sources are diverse, with significant sums coming from Canada, the UK, and Indonesia. Imports of inedible and technical tallow, waste beef fat that can be turned into biofuels, have also risen 50pc so far this year to 800,000lb on ample supply from Brazil. While soybean oil was responsible for nearly half of biomass-based diesel production in 2021, that share has declined to around a third over the first four months this year as imports surge (see graph). "Every pound of imported feedstock that comes in displaces one pound of domestically sourced soybean oil or five pounds of soybeans," said Kailee Tkacz Buller, chief executive of the National Oilseed Processors Association. Even as LCFS and RFS credit prices have fallen over the last year, hurting biofuel production margins and threatening capacity additions , imports have not slowed. Feedstock suppliers, many from countries with less mature biofuel incentives and limited biorefining capacity, might have few options domestically. And exporting to the US means they can avoid the EU's more prescriptive feedstock limits and mounting scrutiny of biofuel imports. More ambitious targets in future years, particularly for sustainable aviation fuel, "will create a lot of competition for UCO in the global market," said Jane O'Malley, a researcher at the International Council on Clean Transportation. But for now, "the US has created the most lucrative market for waste-based biofuel pathways." Incentives for US refiners to use waste-based feedstocks will only become stronger next year when expiring tax credits are replaced by the Inflation Reduction Act's 45Z credit, structured as a sliding scale so that fuels generate more of a subsidy as they produce fewer greenhouse gas emissions. While essentially all fuel will receive less of a benefit than in past years since the maximum credit is reserved for carbon-neutral fuels, the drop in benefits will be most pronounced for fuels from vegetable oils. Granted, President Joe Biden's administration wants the 45Z credit to account for the benefits of "climate-smart" agriculture, potentially helping close some of the assessed emissions gap between crop and waste feedstocks. But the administration's timeline for issuing guidance is unclear, leaving the market with little clarity about which practices farmers should start deploying and documenting. "While a tax credit can be retroactive, you can't retroactively farm," said Alexa Combelic, director of government affairs at the American Soybean Association. Squeaky wheel gets the soybean oil The concerns of agricultural groups have not gone unnoticed in Washington, DC, where lawmakers from both parties have recently called for higher biofuel blending obligations, prompt 45Z guidance, and more transparency around how federal agencies scrutinize UCO imports. There are also lobbying opportunities in California, where regulators are weighing LCFS updates ahead of a planned hearing in November. At minimum, agricultural groups are likely to continue pushing for more visibility into the UCO supply chain, which could take the form of upping already-burdensome recordkeeping requirements for clean fuels incentives and setting a larger role for auditors. Fraud would be hard to prove, but two external groups told Argus that the Biden administration has indicated that it is looking into UCO collection rates in some countries, which could at least point to potential discrepancies with expected supply. More muscular interventions, including trade disincentives, are also possible. Multiple farm associations, including corn interests frustrated that the country's first alcohol-to-jet facility is using Brazilian sugarcane ethanol , have asked the Biden administration to prevent fuels derived from foreign feedstocks from qualifying for 45Z. The possible return of former president Donald Trump to the White House next year would likely mean sharply higher tariffs on China too, potentially stemming the flow of feedstocks from that country — if not from the many others shipping waste-based feedstocks to the US. Protectionism has obvious risks, since leaving refiners with fewer feedstock options could jeopardize planned biofuel capacity additions that ultimately benefit farmers. But at least some US agriculture companies, insistent that they can sustainably increase feedstock production if incentives allow, see major changes to current policy as necessary. By Cole Martin Waste imports crowd out soybean oil Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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