ExxonMobil hits Guyana oil output goal
ExxonMobil reached targeted crude production of 120,000 b/d at the Liza 1 well on Guyana's deepwater Stabroek block, a milestone that had been delayed by an earlier re-injection glitch and equipment delays.
The target was achieved a year after start-up of the Liza Destiny floating production, storage and offloading (FPSO) vessel, with the company targeting full production of 32.1°API Liza crude in first quarter 2020.
"We are disappointed by the number of equipment issues experienced and that, because of these issues and Covid-19, commissioning of the gas injection system took longer than originally projected," ExxonMobil Guyana president Alistair Routledge said.
In welcoming the output milestone, Guyana's natural resources minister Vickram Bharrat did not refer to delays in the lifting of the country's crude entitlement caused by the production delays. A fourth 1mn bl cargo had been scheduled to be lifted in mid-December. The natural resources ministry did not respond to a request for comment on a new lifting schedule.
In subsequent stages, ExxonMobil plans to expand Guyana offshore flows to 750,000 b/d in 2026.
Border signal
Guyana's oil production is rising against the backdrop of a new legal development in the country's 120-year-old territorial dispute with neighboring Venezuela.
In an 18 December ruling, the International Court of Justice (ICJ) said it has jurisdiction to hear Guyana's case seeking validation of its boundary with Venezuela.
The festering dispute is a legacy of British colonialism in Guyana. Caracas has long claimed sovereignty over the Essequibo region that makes up the western two thirds of Guyana, including oil-prone maritime territory.
Venezuela's navy in 2013 seized a research vessel working in the Roraima block under contract from US independent Anadarko. The vessel and the crew were released after a week.
In December 2018, ExxonMobil suspended seismic surveys on a part of Stabroek after a research vessel it contracted was approached by a Venezuelan navy ship. ExxonMobil said the incident would not interrupt its long-term drilling and development operations.
The Hague-based ICJ's announcement comes a month after the head of Guyana's army said no foreign forces will again be allowed to "target" the country's oil exploration and production operations.
"The court's decision means international law can be brought to bear to ensure that Guyana's patrimony is preserved," President Irfaan Ali said.
The ruling was rejected by Venezuela's foreign minister Jorge Arreaza who said the ICJ had no jurisdiction in a matter that should be discussed bilaterally with Guyana.
No schedule has been fixed by the court for the hearing of the substantive case.
Related news posts
Opec sticks to its guns on oil demand growth
Opec sticks to its guns on oil demand growth
London, 12 March (Argus) — Opec has once again kept unchanged its bullish forecast for oil demand growth this year, even while others including Saudi state-controlled Aramco continue to see much lower levels of growth. In its latest Monthly Oil Market Report (MOMR), Opec forecasts oil demand to grow by 2.25mn b/d this year, a level that has not changed since the organisation first published its projection for 2024 in July of last year. It kept its demand growth projection for 2025 unchanged at 1.85mn b/d. The group said growth this year will be driven by China, India and the Middle East and further supported by easing inflation rates throughout 2024 and 2025. It notes further upside potential for global economic growth if inflation cools faster than anticipated, allowing central banks to "consider more accommodative policies." Other forecasters see similar trends driving oil demand growth this year, but the scale of their growth projections is much lower. The IEA, for example, is guiding for an increase of 1.22mn b/d this year, while the US' EIA sees growth of 1.4mn b/d. But the most intriguing comparison is between Opec and Aramco, the world's largest oil producing company and the national champion of Saudi Arabia — the most influential Opec member. Aramco's chief executive Amin Nasser said on 10 March that he expects oil demand to grow by 1.5mn b/d in 2024, which is more than 700,000 b/d lower than Opec's forecast. The most notable change to Opec's latest MOMR forecasts relate to oil supply. The group downgraded its non-Opec liquids production growth forecast by 120,000 b/d this year to 1.07mn b/d, following the decision by several Opec+ members to extend their latest voluntary supply cuts by three months to the end of June. For 2025, the group now sees non-Opec production growing by 1.40mn b/d, up by 130,000 b/d compared with its previous forecast. It said this upgrade is mainly due to base changes made in 2024. Opec crude production fell by 200,000 b/d in February to 26.57mn b/d, according to an average of secondary sources that includes Argus . This puts the group's production in February almost 1.9mn b/d below Opec's projected call on its own members crude for 2024, which it sees at 28.46mn b/d. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australian government seeks compromise on oil, gas tax
Australian government seeks compromise on oil, gas tax
Brisbane, 12 March (Argus) — Australia's Labor party-led federal government has urged the Liberal-National coalition opposition to back changes to the three-decades old Petroleum Resources Rent Tax (PRRT), which it said is backed by the industry and will produce greater returns from the offshore sector. Proposed changes to the PRRT would limit the percentage of taxes able to be avoided through deductions for expenditure on offshore project development to 90pc each year . Australia's treasury has forecast the changes would net an extra A$2.4bn ($1.6bn) in government tax revenue over the next four years. But the government would accept a coalition demand by moving to streamline approvals for major resources projects, as part of changes to the Environment Protection and Biodiversity Conservation (EPBC) Act, which will include a federal Environmental Protection Agency, federal treasurer Jim Chalmers said in Sydney on 11 March. The federal government will clarify requirements for offshore oil and gas storage regulatory approvals to ensure consultation is more targeted and effective, Chalmers said, while improving upfront guidance to developers on what approvals will be needed, to enable more certainty. Any changes to the EPBC Act will not apply retrospectively to projects under way, Chalmers confirmed. The government has pressured the coalition to back the PRRT, as without its support it would be forced to negotiate with the Greens party, which opposes fossil fuel extraction and has called for a lower deduction threshold. The Australian Energy Producers lobby group, formerly the Australian Petroleum Production and Exploration Association, has backed the tax changes as striking a balance between budget pressures and certainty for industry. But the opposition, which has demanded streamlined approvals for gas projects as a condition for its backing of the changes, is unlikely to respond before a key paper is released. The legislation containing the changes has been referred to the Australian Senate's Economics Legislation Committee, with a report due by 18 April. The federal government has also promised to reform offshore development laws to simplify the consultation requirements needed to progress environmental plans, after domestic independents Woodside and Santos were hit with delays to key projects in recent months. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US contends with foreign policy restraints
US contends with foreign policy restraints
Washington, 11 March (Argus) — Foreign policy issues rarely headline US presidential elections, but the rest of the planet has a vested interest in the decision of US voters in November whether to re-elect President Joe Biden or to return his predecessor Donald Trump to office. Ideological differences between the two candidates are obvious and, at least in the case of Biden, the policy positions are clear enough to outline a possible course on global affairs in 2025-29. Trump's possible actions in the same period are harder to pin down — his promise to make America as great as he says it was during his presidency is characteristically inexact, and there are many competing proposals expressed by his former and would-be foreign policy advisers. But there are challenges that will confound either Biden or Trump, especially on issues in which the differences between the two presidencies were more stylistic than substantive, such as Iran sanctions and confrontation with China. Foreign policy decisions made by Trump have constrained Biden's room for manoeuvre in the Middle East and other regions. Biden's legacy — support for Ukraine, Indo-Pacific alliances and "friend-shoring" — may likewise prove hard to undo without causing direct harm to US interests. Both have encountered limits to US power during their term in office, despite the country's overwhelming military and financial edge. And any occupant of the White House would have to contend with a world that has evolved in many complex ways in the past decade. The Middle East is one area where both presidents have tried and failed to dial down US presence. Biden's administration continued its predecessor's course of advancing the normalisation of Israel's relations with Mideast Gulf states, only to find itself thrust into a position of advocating a two-state solution to the Israel-Palestine conflict in the wake of the military operation in Gaza. Tehran has shrugged off both Trump's "maximum pressure" campaign and Biden's bid for renewing the Iran nuclear deal, by finding ways to bypass US sanctions under the auspices of China, the buyer of last resort for Iranian and other sanctioned crude. No exit Trump's unilateral exit from the JCPOA nuclear deal has proven consequential for the wider Middle East. With no deal to constrain its nuclear programme, Tehran's theoretical capacity to produce nuclear weapons is matched by demonstrated ballistic ability to deliver large payloads across the entire region. "I expect that Iran's nuclear programme is going to thrust itself back into the headlines" soon, says Johns Hopkins University professor Adam Szubin, a former top US sanctions enforcer. An informal US-Iran deal to delay Tehran's progress on the nuclear front is being tested daily in the wake of the Gaza conflict, as the US and Iran-backed militants in Syria, Iraq and Yemen are exchanging fire. The one big change since the Trump presidency is a detente between Tehran and its erstwhile Mideast Gulf rivals. Riyadh and Abu Dhabi encouraged Trump to confront Iran in 2017-18. They are now urging Biden to tread carefully in Yemen as the US tries to curb the Houthi threat to Red Sea shipping. Trump's transactional approach to foreign policy may have initially appealed to the Gulf Arab powers, but the US turned out to be an unreliable partner — Trump did not intervene after an Iranian attack in September 2019 on Saudi state-run Aramco's key Abqaiq oil hub. Saudi Arabia is now pushing for more formal security guarantees from the US — a prospect that seems possible to accomplish under Biden, even if tied to broader Middle East issues such as regional economic integration and addressing the Palestinian dilemma. The Biden administration's approach to managing global oil markets has turned out to be more nimble than its predecessor's, with the additional benefit of divorcing relations with Opec from the US-Saudi geopolitical agenda. Trump, once in office, could undo all that, but there is no alternative that would satisfy Riyadh's current security and economic priorities. The Biden administration's current thinking on Iran remains reliant on de-escalation of tensions, including by addressing Gaza and other Middle East conflicts. Former Trump administration officials are arguing for a more muscular approach to Iran, and for putting more economic pressure on China to stop importing Iranian crude. Trump himself shows little willingness to confront Iran militarily. But the prospect of greater economic pressure against Iran and China is one issue in which Trump and his advisers seem to have ideas in common. The great helmsmen US-China relations are stable following a recent summit between Biden and Chinese president Xi Jinping, but "it's a brief upside in a relationship that is in a controlled, steady downward decline", research firm Amundi Investment Institute's head of geopolitics, Anna Rosenberg, says. The Biden administration has ruled out a complete decoupling of the US and Chinese economies, but it is imposing trade restrictions in the semi-conductor, renewable energy and electric vehicle sectors. Biden's policy of fragmenting global markets to secure the supply of critical minerals and processing technology for renewable energy continues efforts that started under Trump, even though the current White House looks at that through the decarbonisation lens. A second Trump administration "will probably be much more broad-based in terms of trade restrictions", Rosenberg says. Evasion of Iran sanctions already demonstrates the limits of the US' economic pressure toolkit. Chinese importers' ability to avoid reliance on US dollars leaves Washington little choice — retaliating with sanctions against major Chinese banks and companies would affect the US and global economy as well. The same dynamic is likely to play out in a hypothetical scenario of responding to China's more assertive posture against Taiwan, whether by military or economic means, Szubin says. "The US response is not going to be Russia-style sanctions that go after the central bank, that cut off the largest banks from the US dollar," he says. Even in the case of Russia, the financial constraint effect of western sanctions turned out to be less than expected. "If China was able to build and promote the alternative, non-dollar-based financial system, then financial sanctions against China probably would not be as powerful or effective," US Council on Foreign Relations fellow Zoe Liu says. Biden and Trump's greatest differences are perhaps on the value of US alliances and Ukraine, and the possibility of Trump's return to office has already galvanised European countries to devote greater resources to defence spending. "If a [potential] US president doesn't want to defend its allies, that's all it takes — that threat in itself is big enough to cause a change in action," Rosenberg says. A notional deal to end fighting in Ukraine within a day of taking office may or may not be a serious pledge by Trump, but it assumes that Ukraine and its EU allies will play along and that Russian president Vladimir Putin is willing to negotiate. The US disengagement from the Middle East has led to regional powers patching up relations and looking for new alliances in recent years. Erratic actions on the wider global stage likewise would prompt US allies to look for alternatives. A Trump-imposed compromise in Ukraine could lead to similar deals by erstwhile US allies, such as finding accommodation with China on energy transition technologies. It may be a feeble guarantee against drastic steps by Washington, but partners will be hoping it is harder to unwind the individual elements of a US alliance combining security, energy and finance. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan’s GDP revised up on increased company spending
Japan’s GDP revised up on increased company spending
Osaka, 11 March (Argus) — Japan's economy managed to avoid a recession in last year's final quarter, supported by increased spending on facilities and equipment by the country's private-sector firms. Seasonally adjusted gross domestic product (GDP) grew at an annualised 0.4pc for October-December compared with the previous quarter, according to a second preliminary data release by the cabinet office on 11 March. The figure was revised up from a 0.4pc fall during the period, announced in February, resulting in a rebound from a 3.2pc contraction posted for July-September. The upwards revision reflected firm investment by private-sector companies, which rose by 8.4pc on an annual basis from the previous quarter. This followed stronger capital expenditure (capex) during October-December. Japan's capex rose by 16.4pc from a year earlier to ¥14.4 trillion ($98bn) in the fourth quarter, mainly driven by manufacturing industries related to information and communications and transport equipment, according to data released by the ministry of finance on 4 March. The solid capex suggests Japanese demand for energy and material resources could increase in the industrial sector, including manufacturing and non-manufacturing segments. This could also follow the government's drive for a digital and green transformation to achieve its net zero emissions goal by 2050. The potential expansion of data centres and semiconductor fabrication plants is forecast to boost Japan's peak power demand by 5.37GW in the April 2033-March 2034 fiscal year, according to a document released by the trade and industry ministry on 27 February. This may support demand for thermal fuels such as coal and LNG along with cleaner fuels. Japan is also encouraging private-sector firms to expand their investment in cleaner projects that will contribute to achieving its net zero emissions goal, while providing subsidies to accelerate smooth energy transition. Tokyo issued around ¥1.6 trillion of green transformation bonds through its first auction held in February, based on its scheme to issue a total of ¥20 trillion over the next decade. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.