Royal oil diplomat takes the reins in Saudi Arabia
The energy industry veteran takes up his role at a critical time, as Riyadh pursues ambitious economic diversification plans
Saudi Arabia's new energy minister, Prince Abdulaziz bin Salman, says there will be no major shift in the Opec linchpin's oil policy. But, as the first royal ever to hold the portfolio, his tenure will see changes of emphasis at home and abroad.
"Fundamentally, Saudi Arabia's energy policy is resting on a few pillars. The pillars do not change," Prince Abdulaziz told the World Energy Congress in Abu Dhabi on 9 September. But a subtle shift in Saudi policy making emerged at the Opec/non-Opec Joint Ministerial Monitoring Committee (JMMC) meeting in Abu Dhabi a few days later. The JMMC's top agenda item focused on extracting pledges of better compliance from producers that have persistently flouted their output quotas — a goal the new minister pursued with single-mindedness.
Describing himself as a "consensus builder", Prince Abdulaziz says he aims to make decision-making "more inclusive" in a producer group increasingly seen by other members as dominated by a Saudi-Russian duumvirate. But he caveats this with another message: "I promise you, I will be more forthright. I will speak my mind often." Having extracted an official compliance pledge from Iraqi oil minister Thamir Ghadhban, Prince Abdulaziz will lead a delegation of Opec and non-Opec officials to Baghdad this month, because he says "the courteous thing to do is to visit them and thank [them] in person". Given Iraq's past intransigence, Saudi Arabia had not planned to travel to Iraq.
Prince Abdulaziz, an elder half-brother of powerful royal heir Crown Prince Mohammad bin Salman, is a 30-year plus veteran of the energy ministry, with a long list of achievements in his own right. Alongside his former boss at the ministry, Khalid al-Falih, he has played a leading role in spearheading the Saudi-Russian axis that has put its stamp on Opec+ since 2016. And diplomatic outreach — to other oil producers and leading oil consumers — has been the fulcrum of his career. He was a key architect of the ground-breaking International Energy Forum, which provided the first platform for producing and consuming countries to work together.
Within Saudi Arabia, Prince Abdulaziz's role as energy minister will inevitably differ from that of his predecessor al-Falih, who was removed by King Salman bin Abdul-Aziz on 8 September. One Opec official noted that while "al-Falih was a hard-driving technocrat, the prince is a hard-driving diplomat". The prince assumes his new role at a critical period, as Riyadh powers ahead with an ambitious economic diversification agenda. He has been heavily involved in policies aimed at improving energy efficiency in Saudi Arabia, and this is expected to remain a major focus of a ministerial role centred on regulating the oil, gas and electricity sectors. But as the new minister will not hold the dual post of board chairman at state-owned Saudi Aramco, he is unlikely to be actively involved in the planned initial public offering (IPO) of a 5pc stake in the firm.
Too big to succeed
Riyadh has given no official explanation for al-Falih's sudden fall from favour with Crown Prince Mohammad. Slow progress in pushing through the IPO may have played a role. At the same time, al-Falih came in for criticism for not pushing hard enough for growth of the industrial sector, which came under his remit with the expanded mega-ministry of energy, minerals and industry in 2016 — a key driver of the crown prince's Vision 2030 economic diversification plan. Ultimately, the much broader portfolio proved too big for al-Falih to deliver on its ambitious targets.
Al-Falih's former role was upended first on 30 August, when the ministry was broken up, then on 6 September by the appointment of Yasir al-Rumayyan, governor of Saudi Arabia's PIF sovereign wealth fund, as new chairman of Aramco. His ultimate removal came just days ahead of the JMMC meeting on 12 September.
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Australian new environment agency to speed up approvals
Australian new environment agency to speed up approvals
Sydney, 16 April (Argus) — The Australian federal government announced today it will introduce new legislation in the coming weeks to implement the second stage of its Nature Positive Plan, which includes setting up a national environment protection agency to speed up approval decisions. The planned Environment Protection Australia (EPA) will initially operate within the Department of Climate Change, Energy, Environment and Water until it transitions to become an independent statutory agency, with "strong new powers and penalties" to better enforce federal laws, the government said on 16 April. The EPA chief will be an independent statutory appointment, similar to the Australian federal police commissioner, so that "no government can interfere" with the new agency's enforcement work. The agency will be able to audit businesses to ensure they are compliant with environment approval conditions and issue environment protection orders to anyone breaking the law. Penalties will be increased, with courts able to impose fines of up to A$780mn ($504mn) or jail terms for up to seven years in cases of extremely serious intentional breaches of federal environment law. EPA will also be tasked with speeding up development decisions, including project assessments in areas such as renewable energy and critical minerals. Almost A$100mn will be allocated to optimise the approval processes, with its budget directed to support staff to assess project proposals and help businesses comply with the law. A new independent body Environment Information Australia (EIA) will also be created to provide environmental data to the government and the public through a public website. EIA will need to develop an online database giving businesses quicker access to data and helping EPA to make faster decisions. It will also need to publish state of environment reports every two years. The government said that an audit ordered by environment minister Tanya Plibersek last year found that around one in seven developments could be in breach of their offset conditions, when a business had not properly compensated for the impact a development was having on the environment, highlighting "the need to urgently strengthen enforcement". The planned new legislation is part of the federal government's reform of Australia's environmental laws including the Environment Protection and Biodiversity Conservation Act. Resource project decisions are currently made by the environment minister, with the move to an independent agency will removing any perception of political interference in such decisions, the government said when it first announced the reforms in late 2022. The first stage of the reform was completed late last year with new laws passed to create the Nature Repair Market, with further stages expected to be implemented in the future, the government said. Tight timing Resources industry body the Chamber of Minerals and Energy of Western Australia (CMEWA) welcomed the announcement that the federal government will take a "staged approach" to the implementation of the reforms but noted the timing of EPA's implementation was "tight". "We continue to hold reservations about the proposed decision-making model and will continue to advocate for a model that balances ecologically sustainable development considerations and includes the [environment] minister as the decision maker," CMEWA chief executive Rebecca Tomkinson said. The Minerals Council of Australia (MCA) said that it had been advocating for the creation of EIA, whose future collated data "will provide greater certainty and reduced costs for both government and project proponents", which "may shave years off project development". But it was cautious about potential "unintended consequences" stemming from more bureaucracy. "Australia has one of the most comprehensive environmental approvals processes in the world and the MCA has been clear about the significant risks of duplicative, complex and uncertain approvals processes pose to the minerals sector, the broader economy and the environment if we do not get this right," it warned. By Juan Weik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
La deuda de Pemex sobresale en el panorama electoral
La deuda de Pemex sobresale en el panorama electoral
Mexico City, 15 April (Argus) — La campaña presidencial de México termina en menos de dos meses, pero aunque ambas candidatas proponen una revolución verde en el sector de la energía, ninguna de ellas ha propuesto un plan viable para evitar la implosión financiera de la empresa estatal Pemex. Claudia Sheinbaum, candidata de continuidad para la política energética nacionalista del Presidente Andrés Manuel López Obrador, anunció el mes pasado su estrategia energética, comprometiéndose a aumentar la producción de petróleo y gas de Pemex, aumentar el rendimiento de las refinerías y la producción petroquímica, desarrollar una industria nacional de litio y buscar un nuevo enfoque en la generación de energía renovable. La antigua jefa de gobierno de la Ciudad de México no ha proporcionado detalles sobre ninguna de estas políticas, pero es difícil conciliar su compromiso con una ampliación de las energías renovables con un límite en la inversión del sector privado sin depender en gran medida del aumento de la financiación de la estatal de electricidad CFE. La política de Sheinbaum en materia de energías renovables es la única desviación de la agenda energética de López Obrador, aunque las agencias de calificación, los inversores y los analistas coinciden en que es probable que Pemex incurra en impago sin una amplia reforma estructural. Pemex tenía una deuda total de $106,100 millones a finales de 2023 y se enfrenta a $10,000 millones en vencimientos de deuda este año. El impulso del gobierno para aumentar el rendimiento de las refinerías ha generado pérdidas de miles de millones de dólares para Pemex. Solo en 2023, la división de refinación de Pemex reportó una pérdida de $4,400 millones, una mejora con respecto a una pérdida de $11,000 millones el año anterior. De 2019 a 2023, la división de refinación de la empresa registró más de $46,000 millones en pérdidas. López Obrador puso el rescate de Pemex y sus refinerías en el centro de su administración. Pero a pesar de no detener la espiral de deuda de la empresa, la disminución de la producción de crudo, el empeoramiento del récord de seguridad y el aumento de las emisiones de gases de efecto invernadero, sus políticas han tenido un coste que Sheinbaum no ha querido refutar públicamente. En su lugar, se compromete a lanzar el proyecto de la refinería Olmeca de 340,000 b/d de la empresa, que ya tiene dos años de retraso y ha costado al menos el doble del presupuesto original de $8,000 millones, dinero que las agencias de calificación afirman que debería haberse dirigido al negocio principal de Pemex en la exploración y producción. El apoyo gubernamental a Pemex, por un total de más de $52,000 millones entre 2019 y 2023, ha sido incapaz de mover la aguja en sus métricas financieras u operativas, y ahora amenaza la calificación crediticia soberana de México. Sheinbaum ha evitado abordar públicamente la carga de la enorme deuda de Pemex, proponiendo únicamente "niveles de deuda aceptables en el sector de la energía". Pero dada la importancia de Pemex para el proyecto político del partido Morena, además los cientos de miles de puestos de trabajo que dependen de Pemex, no se puede permitir que la empresa incumpla. Por otro lado, la candidata de oposición Xóchitl Gálvez pide poner fin al "caos financiero" en Pemex, diversificar su negocio hacia iniciativas de bajas emisiones de carbono, políticas rigurosas de emisiones, el cierre de sus refinerías más contaminantes, un nuevo enfoque en renovables y una reapertura de la industria energética a la inversión del sector privado. Sin embargo, a pesar de su perspectiva más favorable para la inversión privada, Gálvez aún no ha ofrecido una solución detallada para la situación financiera de Pemex. Sus planes para Pemex pueden ser demasiado radicales para los votantes, especialmente dentro del importante sindicato de trabajadores del petróleo, que repudió rápidamente sus llamados el mes pasado para cerrar dos refinerías. Incluso si ganara, la oposición que representa podría tener dificultades para acordar un camino a seguir para Pemex. Si la próxima administración vuelve a abrir la puerta a la inversión del sector privado, el nuevo gobierno se enfrentará a un esfuerzo lento para reconstruir los reguladores de la energía que han sufrido de baja inversión en los últimos seis años. Pero será el tamaño de la posible victoria de Sheinbaum lo que determinará el futuro del sector de la energía mexicano. Una mayoría convincente podría permitirle aprobar las grandes reformas energéticas que eludieron a López Obrador y seguir limitando la participación del sector privado en el sector energético, justo cuando la inversión directa extranjera en México está en auge en otras industrias. Por Rebecca Conan Producción de crudo en México Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Stakes look low in Washington’s Venezuela dilemma
Stakes look low in Washington’s Venezuela dilemma
Washington, 15 April (Argus) — The US administration's decision to temporarily lift oil sanctions against Venezuela in October last year relied on the premise that economic incentives would prompt Caracas to hold a competitive presidential election. But either the theory was wrong or the incentives were insufficient to encourage Venezuelan president Nicolas Maduro to consider exiting the scene. The US wants Venezuela to allow credible opposition candidates to run in the latter's presidential elections on 28 July, and set this as a condition for extending sanctions relief beyond a looming 18 April deadline. But the Maduro government has prevented key opposition leader Maria Corina Machado from running. The main non-government affiliated candidate allowed to run in the election, governor of the oil-rich Zulia state Manuel Rosales, is viewed with scepticism in Washington. An election in which "only those opposition candidates with whom Maduro and his representatives feel comfortable" can participate will not be considered competitive enough for the US sanctions relief to continue, the US State Department says. Colombian president Gustavo Petro appeared to be mounting a last-ditch effort this week to mediate between Maduro and the opposition. Petro also wants to make it easier for Colombian oil firm Ecopetrol to expand business with its neighbor, including putative plans for gas imports from Venezuela. But doing so requires a massive change of US policy. "The US government looks a little more interested in alleviating sanctions than the sanctioned party," Caracas-based economist Tamara Herrera says. "Barring a grand gesture" by the Maduro government, the US is likely to reimpose sanctions, but perhaps grant specific carve-outs more freely, she says. Maduro's reneging on last year's accord with the opposition over the competitive election comes as no surprise to Washington-based critics of his government. "We've done everything we can to give economic inducement to the regime to behave differently," think-tank Center for Strategic and International Studies' Americas programme director Ryan Berg says, estimating the benefit to Caracas from sanctions relief at $6bn-10bn since October. "I just don't see that they've really given anything" in return. Leading US senators from both parties agree, calling on the White House this week to reimpose the sanctions after 18 April. Do the sanctioned crude shuffle But the six-month period during which Venezuela's state-run PdV was allowed to sell oil freely to any buyer and to invite foreign investment has hardly provided the economic benefits expected in October. India has emerged as a major new destination for Venezuelan crude, importing 152,000 b/d in March. The sanctions relief has not significantly affected US-bound Venezuelan volumes, which averaged 133,000 b/d last year. Even before the October waiver, Washington had allowed Chevron to lift oil from its joint venture with PdV, solely into the US. That exception for Chevron will remain in place. Undoing the US sanctions regime against Venezuela has provided unintended market incentives. Chinese imports of Venezuelan Merey, often labeled as Malaysian diluted bitumen, have been lower since October. Independent refiners in Shandong, which benefited from wide discounts on the sanctioned Venezuelan crude, cut back imports to just a fraction of pre-relief levels. By contrast, state-controlled PetroChina was able to resume imports. The possible reimposition of US sanctions is reflected in the widening Merey discount to Brent ( see chart ). Venezuela's rekindling of a border dispute with Guyana is also irking many countries that might come to its defence, and US elections in November could make the prospects of a US deal with Maduro even less likely. Hopes for a renaissance in oil or democracy in Venezuela seem ever further away. By Haik Gugarats Chinese imports of Venezuelan crude Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Crude futures shrug off Middle East turmoil
Crude futures shrug off Middle East turmoil
Singapore, 15 April (Argus) — Crude oil futures were largely unmoved in early trading in Asia on 15 April, as the market watched for an indication of how Israel would respond to the weekend's unprecedented attack by Iran. Front-month June Brent crude futures rose by 0.7pc to a high of $91.05/bl soon after markets opened, but then fell back to trade 0.2pc lower at $90.26/bl at 10.40am Singapore time (02:40 GMT). May Nymex WTI was down by 0.3pc at $85.37/bl. The threat of an Iranian attack on Israel had sent prices higher last week. Iran fired hundreds of drones and missiles against Israel on the evening of 13 April, ushering in a new phase in a six-month conflict that is threatening regional escalation. Almost all were intercepted before they reached Israeli airspace, according to the Israel Defence Forces. Iran, the US and regional powers appear to want to avoid any further increase in hostilities. Tehran's foreign minister Hossein Amir-Abdollahian said Iran considers its operation to have ended. And the US is urging Israel to claim victory for its defence, in an apparent effort to discourage Israeli prime minister Benjamin Netanyahu's government from feeling compelled to retaliate. Israel's response is unclear. The country's war cabinet is meeting to discuss its next steps. Regional shipping also continues to face the risk of disruption. On 13 April, Iranian naval vessels seized the Portuguese flagged, British-owned MSC Aries container ship transiting through the Gulf of Oman. By Kevin Foster Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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