Equinor 2Q profit supported by higher European output
Norway's state-controlled Equinor posted a small rise in profit on the year in the April-June period, as a lift in its European production offset lower gas prices.
Equinor reported a profit of $1.87bn in the second quarter, up by 2.2pc on the year but down by 30pc from the first three months of 2024. The company paid two Norwegian corporation tax instalments, totalling $6.98bn, in the second quarter, compared with one in the first quarter. Equinor paid $7.85bn in tax in April-June in total.
Its average liquids price in the second quarter was $77.6/bl, up by 10pc from the second quarter of 2023. But average gas prices for Equinor's Norwegian and US production fell in the same period by 17pc and 6pc, respectively.
The company noted "strong operational performance and lower impact from turnarounds" on the Norwegian offshore, including new output from the Breidablikk field. Equinor's entitlement production was 1.92mn b/d of oil equivalent (boe/d) in April-June, up by 3pc on the year.
The company cited "high production" from Norway's Troll and Oseberg fields in the second quarter, as well as new output from the UK's Buzzard field. But US output slid, owing to offshore turnarounds and "planned curtailments onshore to capture higher value when demand is higher", the company said. It estimates oil and gas production across 2024 will be "stable" compared with last year, while its renewable power generation is expected to increase by around 70pc across the same timespan.
Equinor's share of power generation rose by 14pc on the year to 1.1TWh in April-June. Of this, 655GWh was renewables — almost doubling on the year — driven by new onshore wind capacity in Brazil and Poland. "Construction is progressing" on the UK's 1.2GW Dogger Bank A offshore windfarm, Equinor said. It is aiming for full commercial operations in the first half of 2025 at Dogger Bank A — a joint venture with UK utility SSE.
Equinor was granted three new licences in June to develop CO2 storage in Norway and Denmark. The Norwegian licences — Albondigas and Kinno — together have CO2 storage potential of 10mn t/yr. The Danish onshore licence, for which Equinor was awarded a 60pc stake, has potential capacity of 12mn t/yr. Equinor has a goal of 30mn-50mn t/yr of CO2 transport and storage capacity by 2035.
The company's scope 1 and 2 greenhouse gas (GHG) emissions amounted to 5.6mn t/CO2 equivalent (CO2e) in the first half of the year, edging lower from 5.8mn t/CO2e in January-June 2023. It also incrementally cut its upstream CO2 intensity, from 6.7 kg/boe across 2023, to 6.3 kg/boe in the first half of this year.
Equinor has kept its ordinary cash dividend steady, at $0.35/share, and will continue the extraordinary cash dividend of $0.35/share for the second quarter. It will launch a third $1.6bn tranche of its share buyback programme on 25 July.
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Cop 29 boost key to setting much-awaited 2035 targets
Cop 29 boost key to setting much-awaited 2035 targets
London, 9 September (Argus) — As focus shifts to setting new emissions-reduction targets for 2035 against a backdrop of under-promised and undelivered 2030 goals, November's UN Cop 29 climate talks in Baku, Azerbaijan, will need to provide the much lacking fuel to power the previous summit's ideals. Countries will be expected to submit their next nationally determined contributions (NDCs) to the Paris climate agreement — emissions cut targets, this time for 2035 — in November-February, as part of a cycle that requires countries to "ratchet up" their commitments every five years. Denmark's climate minister Dan Jorgensen said this year forthcoming NDCs "have to be informed by the decisions [at Cop 28] in Dubai and will be measured on their meaning". The global stocktake signed there last year included an energy section calling for "transitioning away from fossil fuels in energy systems", a tripling of renewable capacity by 2030 and for "accelerating action in this critical decade", giving the direction countries need to take in the energy transition. But the agreement has little momentum. Although some countries, including the UK, have signalled they have made a start on their 2035 plans, work remains very much in progress. The UAE, Azerbaijan and Brazil — the so-called Cop presidencies troika — in July encouraged parties to "step up the work" ahead of Cop 29, calling on "early movers" to signal their commitments as early as this month. Among major emitters, the EU has yet to set its 2035 targets, although the European Commission has proposed a goal to reduce greenhouse gas emissions by 90pc by 2040 from a 1990 baseline. The US said it would develop an "ambitious" new plan within the UN deadline. But any developments will hinge on the results of the country's election taking place just days before Cop 29 starts. And China recently unveiled new guidelines, but stopped short of issuing new targets. Shaky foundations Countries will need to increase previous ambition levels significantly for the new targets to be sufficient. Even if all 2030 plans submitted up to 25 September last year were implemented, emissions reductions would still be at least 11bn t of CO2 equivalent (CO2e) short of what is needed to limit global warming to 2°C above pre-industrial levels, and 19bn t of CO2e short for 1.5°C — the temperature goals set out in the Paris Agreement — according to the UN. Australia was the sole G20 member on track to meet its 2030 target for outright emissions reductions as of last October, according to IEA analysis. And only Australia, Canada, Japan, Russia, South Korea, the US, EU, UK and Brazil have outright emissions-reduction targets. Other G20 members are either measuring their emissions against business-as-usual scenarios or capping them at a specified level, which leaves space for further increases. Room for manoeuvre grows ever smaller, with an 80pc likelihood that the average global temperature across one of the next five years will breach the 1.5°C target, according to the World Meteorological Organisation. Last year was the warmest on record, averaging 1.45°C above pre-industrial levels. Cop 29 could be the catalyst needed to step up action, particularly for countries that would struggle financially to implement stricter measures. Parties will agree a new climate finance goal at the summit and resume talks on the outstanding elements of carbon market mechanisms under Article 6 of the Paris deal, another way in which mitigation outcomes and finance can be transferred between regions. But success hinges, as ever, on high levels of co-operation between countries with conflicting interests, something that has already seen Article 6 disagreements rumble on for years. By Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Methanex to acquire OCI’s methanol business for $2bn
Methanex to acquire OCI’s methanol business for $2bn
Houston, 9 September (Argus) — Methanol producer Methanex announced Sunday that it will acquire OCI's international methanol business for $2.05bn. As part of the transaction, Methanex will acquire four primary assets, including a 910,000 t/yr methanol facility and 340,000 t/yr ammonia facility in Beaumont, Texas. Methanex will acquire OCI's 50pc interest in the 1.7m t/yr Natgasoline methanol plant in Beaumont. The acquisition of Natgasoline is subject to a legal proceeding between OCI and Proman, the other 50pc holder in Natgasoline, over certain shareholder rights. If the dispute is not resolved within a certain period, Methanex has the option to exclude the purchase of the Natgasoline joint venture and proceed with the rest of the transaction. The transaction also includes OCI HyFuels, a producer of green methanol products such as biomethanol and bio-MTBE, and trading and distribution capabilities for renewable natural gas (RNG) and ethanol. Additionally, Methanex will acquire an idled 1m t/yr methanol facility in Delfzijl, Netherlands. The purchase price includes $1.15 billion in cash, the issuance of 9.9 million shares of Methanex valued at $450 million and the assumption of about $450 million in debt and leases. The acquisition of fertilizer producer OCI began over a year ago, according to OCI officials. "We identified Methanex as the natural owner of OCI Methanol at the outset of our strategic process, which we initiated in the spring of 2023," OCI executive chairman Nassef Sawiris said. This acquisition moves Methanex, primarily a methanol maker, into the ammonia sector. "From an operating perspective, we have a shared culture of safety and operational excellence, and we expect the OCI team will help us build new skills in ammonia while enhancing our capabilities in the evolving business of low carbon methanol production and marketing," Methanex CEO Rich Sumner said. The deal is expected to close in the first half of 2025. The transaction has been approved by the boards of directors of the two companies and is now awaiting certain regulatory approvals and other closing conditions. The transaction is also subject to approval by a simple majority of the shareholders of OCI. The largest shareholder of OCI, has signed an agreement to vote for the transaction. By Steven McGinn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Opec+ members delay output increases to December
Opec+ members delay output increases to December
Dubai, 6 September (Argus) — Opec+ members have opted to delay their plan to start increasing output by two months, against the backdrop of a sharp fall in prices and growing concerns about the oil demand outlook. Eight members of the group — Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman — are now scheduled to start unwinding 2.2mn b/d of "voluntary" crude production cuts from December, instead of October, over a 12-month period, the Opec secretariat said on 5 September. The plan had carried a proviso that the unwinding was subject to "market conditions". And the return of this supply is still not a foregone conclusion. The eight members retain the "flexibility to pause or reverse the adjustments as necessary", the secretariat says. If they go ahead with the updated plan, their collective output targets will rise by around 180,000 b/d in December. The delay to the output increase came as Atlantic basin benchmark North Sea Dated fell close to $75/bl on 5 September, its lowest since December, on concerns over oil demand in China and the US. Beijing imported 1.3mn b/d less crude in July than June, taking its monthly tally of receipts down to 10mn b/d, the lowest in nearly two years. The oil price drop has not taken place in isolation, JP Morgan says. "Alongside commodities, US 10-year treasury yields have tumbled (-70bp) and the US dollar index came down by almost 2pc, signalling a shift in the assessment of macroeconomic risk in the US and globally." The Opec+ delay means that any unwinding of its cuts will not come until after the 5 November US elections. But with gasoline prices there not seen at concerning levels and edging down, oil prices are not viewed as much of an election issue. The decision could help establish a floor under prices, which have fallen despite an oil blockade in Libya that has driven the country's production down to around 300,000 b/d, from almost 1mn b/d. Opec+ may also have sought to add further support to prices by emphasising assurance by overproducers Iraq, Kazakhstan and Russia on "planned compensation schedules". Promised belt tightening from the three would effectively wipe out most barrels coming back to the market until October 2025 — as long as they deliver. For now, the eight members have chosen to buy time and gain more clarity on how the markets develop in the fourth quarter, while also seeking to tighten the noose on compliance. Come early November, those members will have to determine if the market can handle the incremental increase — if not, Opec+ might be up for some hard decisions in December. Compliance and compensation Compliance by some serial overproducers improved in August, Argus estimates. Russia, which has tended to exceed its targets in recent months, saw its output fall by 70,000 b/d to 8.98mn b/d, bang on its formal output target. And Kazakhstan finally started to deliver on its pledge to start compensating for exceeding its targets, with its output in August coming in 40,000 b/d below its effective target under its compensation plan. The biggest overproducer was usual suspect Iraq, which was 200,000 b/d above its formal target and 290,000 b/d over its effective target under its latest plan to compensate for overproducing. Overall production by Opec+ members subject to cuts was barely changed, easing by 10,000 b/d in August, as falls from Russia and Kazakhstan were offset by increases from Nigeria and the UAE. This drove the alliance's output down to 33.82mn b/d, around 30,000 b/d below its collective target. But the forced outages in Libya drove the group's overall output down by a hefty 300,000 b/d. Libya, like Iran and Venezuela, is exempt from production targets. Opec+ crude production mn b/d Aug Jul* Target† ± target Opec 9 21.54 21.45 21.23 +0.31 Non-Opec 9 12.28 12.38 12.62 -0.34 Total 33.82 33.83 33.85 -0.03 *revised †includes additional cuts where applicable Opec wellhead production mn b/d Aug Jul Target† ± target Saudi Arabia 8.96 9.00 8.98 -0.02 Iraq 4.20 4.25 4.00 +0.20 Kuwait 2.40 2.38 2.41 -0.01 UAE 2.98 2.94 2.91 +0.07 Algeria 0.91 0.91 0.91 0.00 Nigeria 1.54 1.46 1.50 +0.04 Congo (Brazzaville) 0.26 0.24 0.28 -0.02 Gabon 0.23 0.21 0.17 +0.06 Equatorial Guinea 0.06 0.06 0.07 -0.01 Opec 9 21.54 21.45 21.23 +0.31 Iran 3.33 3.35 na na Libya 0.92 1.20 na na Venezuela 0.88 0.88 na na Total Opec 12^ 26.67 26.88 na na †includes additional cuts where applicable ^Iran, Libya and Venezuela are exempt from production targets Non-Opec crude production mn b/d Aug Jul* Target† ± target Russia 8.98 9.05 8.98 +0.00 Oman 0.76 0.76 0.76 +0.00 Azerbaijan 0.49 0.48 0.55 -0.06 Kazakhstan 1.37 1.41 1.47 -0.10 Malaysia 0.33 0.34 0.40 -0.07 Bahrain 0.18 0.18 0.20 -0.02 Brunei 0.09 0.09 0.08 0.01 Sudan 0.02 0.02 0.06 -0.04 South Sudan 0.06 0.05 0.12 -0.06 Total non-Opec 12.28 12.38 12.62 -0.34 *revised †includes additional cuts where applicable Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Egypt’s Egas seeks LNG over October-December
Egypt’s Egas seeks LNG over October-December
Singapore, 6 September (Argus) — Egypt's state-owned gas firm Egas is seeking 20 spot LNG cargoes for delivery over October-December through a tender that will close on 12 September. The firm is seeking 17 deliveries to Ain Sukhna, and three deliveries to Jordan's 3.8mn t/yr Aqaba import terminal, through a tender that closes on 12 September. This tender may create additional competition for spot LNG for European buyers. News of the tender may have contributed to a rise in European gas prices, with the front-month contract at the Dutch TTF trading at over €37.50/MWh in the morning, against an Argus assessment of €36.13/MWh on Thursday. But the TTF lost most of its gains later in the day. Egas was last in the market to seek up to five cargoes for delivery over August-September , through a tender that closed on 29 July. This tender was likely to have been fully awarded at an average of a $1.50/mn Btu premium to the TTF, possibly to TotalEnergies, Gunvor and BP, traders said. Traders in mid-August estimated that Egypt would seek about eight to 15 spot cargoes for winter. Its latest requirement for 20 cargoes may indicate that the country's demand for imports is leaning towards the higher end. At the same time Egas executive managing director Magdy Galal had told Argus this February that Egypt would be able to export in winter 2024-25, "as usual". Europe was the main destination for Egyptian LNG exports in recent years. Egypt shipped 84 cargoes to Europe in the past two years, while only 35 vessels were exported elsewhere. Croatia, Greece, Italy, Poland, France, the Netherlands, Spain and the UK were among the recipients of Egyptian cargoes. Egypt last exported LNG in April, when it delivered 209mn m³ of equivalent pipeline gas, data from the Joint Organisations Data Initiative (Jodi) show. But Egypt's appetite for spot cargoes is likely to remain, particularly as domestic gas production in the country has been falling. Gas production in Egypt fell to its lowest for seven years in June , the latest Jodi data show. At the same time, its pipeline gas deliveries from Israel have been hit with uncertainty since the start of the Israel-Hamas conflict in Gaza. Pipeline deliveries from Israel to Egypt fell to 731mn m³ in June from 851mn m³ in May, having reached record highs earlier this year. LNG exports from Egypt this winter are "not very likely" , Italy's Eni said on 26 July. By Rou Urn Lee and Alexandra Vladimirova Egas tender delivery windows Delivery to Ain Sukhna, Egypt Delivery to Aqaba, Jordan 4-5 Oct 2024 16-17 Oct 2024 9-10 Oct 2024 21-22 Nov 2024 14-15 Oct 2024 23-24 Dec 2024 19-20 Oct 2024 24-25 Oct 2024 29-30 Oct 2024 8-9 Nov 2024 13-14 Nov 2024 18-19 Nov 2024 23-24 Nov 2024 28-29 Nov 2024 3-4 Dec 2024 9-10 Dec 2024 15-16 Dec 2024 21-22 Dec 2024 27-28 Dec 2024 31 Dec 2024 - 1 Jan 2025 — Egas Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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