Iraq signs $27bn energy deal with TotalEnergies
France's TotalEnergies today signed a $27bn agreement with the Iraqi government to invest in four troubled energy projects that the country has struggled to implement for several years.
These include the common seawater supply project (CSSP), which Iraq has been trying to progress for over a decade. TotalEnergies will develop a 7.5mn b/d facility to provide desalinated seawater for injection into oil fields, which will be vital to maintaining and ultimately expanding production at mature fields in southern Iraq.
TotalEnergies will also boost production at the 85,000 b/d Ratawi oil field in Basrah, lifting capacity by 150pc to a plateau of 210,000 b/d. Alongside this will be a central processing facility to handle captured associated gas from five oil fields in Basra: Ratawi, West Qurna 2, Majnoon, Luhais and Tuba. These will process up to 600mn ft³/d, split equally over two phases, producing around 12,000 b/d of condensate and 3,000 t/d of LPG.
The final part of the deal covers a 1,000MW solar power plant which Iraq says will produce electricity at less than 45pc of the cost of its current generation capacity. According to the initial agreement signed by TotalEnergies with Iraq in March, the first 500MW phase is due online in just over a year.
The country has been plunged into extended power outages, sparking sporadic protests and the resignation of the minister of electricity in May. The main reason for the crisis is the failure of the country's generation and transmission infrastructure to meet rising demand, making the solar power deal even more important.
Iraq said it envisages a profit of $95bn on the investment over the life of the contract, assuming an oil price of $50/bl. But it could still face delays. The signing ceremony comes ahead of Iraq's parliamentary elections in October, which could bring in a new government in Baghdad.
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New US rule may let some shippers swap railroads
New US rule may let some shippers swap railroads
Washington, 30 April (Argus) — US rail regulators today issued a final rule designed to help customers switch railroads in cases of poor rail service, but it is already drawing mixed reviews. Reciprocal switching, which allows freight shippers or receivers captive to a single railroad to access to an alternate carrier, has been allowed under US Surface Transportation Board (STB) rules. But shippers had not used existing STB rules to petition for reciprocal switching in 35 years, prompting regulators to revise rules to encourage shippers to pursue switching while helping resolve service problems. "The rule adopted today has broken new ground in the effort to provide competitive options in an extraordinarily consolidated rail industry," said outgoing STB chairman Martin Oberman. The five-person board unanimously approved a rule that would allow the board to order a reciprocal switching agreement if a facility's rail service falls below specified levels. Orders would be for 3-5 years. "Given the repeated episodes of severe service deterioration in recent years, and the continuing impediments to robust and consistent rail service despite the recent improvements accomplished by Class I carriers, the board has chosen to focus on making reciprocal switching available to shippers who have suffered service problems over an extended period of time," Oberman said today. STB commissioner Robert Primus voted to approve the rule, but also said it did not go far enough. The rule adopted today is "unlikely to accomplish what the board set out to do" since it does not cover freight moving under contract, he said. "I am voting for the final rule because something is better than nothing," Primus said. But he said the rule also does nothing to address competition in the rail industry. The Association of American Railroads (AAR) is reviewing the 154-page final rule, but carriers have been historically opposed to reciprocal switching proposals. "Railroads have been clear about the risks of expanded switching and the resulting slippery slope toward unjustified market intervention," AAR said. But the trade group was pleased that STB rejected "previous proposals that amounted to open access," which is a broad term for proposals that call for railroads to allow other carriers to operate over their tracks. The American Short Line and Regional Railroad Association declined to comment but has indicated it does not expect the rule to have an appreciable impact on shortline traffic, service or operations. Today's rule has drawn mixed reactions from some shipper groups. The National Industrial Transportation League (NITL), which filed its own reciprocal switching proposal in 2011, said it was encouraged by the collection of service metrics required under the rule. But "it is disheartened by its narrow scope as it does not appear to apply to the vast majority of freight rail traffic that moves under contracts or is subject to commodity exemptions," said NITL executive director Nancy O'Liddy, noting it was a departure from the group's original petition which sought switching as a way to facilitate railroad economic competitiveness. The Chlorine Institute said, in its initial analysis, that it does not "see significant benefit for our shipper members since it excludes contract traffic which covers the vast majority of chlorine and other relevant chemical shipments." By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
First TMX cargo booked on Aframax to China
First TMX cargo booked on Aframax to China
Houston, 30 April (Argus) — The first cargo shipped on the Trans Mountain Expansion (TMX) crude pipeline is scheduled to load on an Aframax in Vancouver, British Columbia, beginning 18 May for June delivery in China, according to sources with knowledge of the transaction. Suncor provisionally booked the Aframax Dubai Angel for a Vancouver-China voyage at $3.5mn lumpsum, equivalent to $6.39/bl for Access Western Blend, market participants said. In March, China's state-run Sinochem purchased the first TMX cargo — 550,000 bl of Canadian Access Western Blend — for June delivery. The shipping fixture would mark the first Vancouver-China crude delivery since May 2023, according to Vortexa, a possible indicator of steady Asia-Pacific demand to come with increased maritime access for Canadian oil producers. China already receives heavy sour Canadian crude re-exported from the US Gulf coast, with about 110,000 b/d arriving in 2023, Vortexa data show. The new 590,000 b/d pipeline begins commercial service on 1 May, with three Aframax-capable berths at Vancouver's Westridge Marine Terminal, up from one previously. An oversupply of Aframax crude tankers on the west coast of the Americas in anticipation of TMX-driven demand pressured Vancouver-loading rates to six-month lows on 19 April , according to Argus data, but market participants expect demand to increase beginning in the second half of May. Three regulatory approvals remained under assessment by the Canada Energy Regulator (CER) on 30 April. The applications concern piping, valves and other components at two pipeline inspection device traps and the mainline pipe between the two traps. The traps were added for safety assurance when the operator was allowed by CER to use a smaller diameter pipe as part of the Mountain 3 deviation. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canada’s TMX awaits regulator OK on eve of service
Canada’s TMX awaits regulator OK on eve of service
Calgary, 30 April (Argus) — Regulatory approvals needed for the 590,000 b/d Trans Mountain Expansion (TMX) crude pipeline in western Canada are coming down to the wire on the eve of entering commercial service. The major crude pipeline last week maintained its plan to start commercial operations on 1 May, but three filings remain under assessment by the Canada Energy Regulator (CER) with less than 24 hours to go. Federally-owned Trans Mountain requires all sections, called spreads, of the pipeline to receive regulatory blessing before the line can be put into service. Outstanding are applications pertaining to Spread 5B Part 3, which runs from kilometer post 1064 to 1067, according to CER's website. The segment is near Hope, British Columbia, about 140 kilometers (87 miles) east of the line's terminus in Burnaby. The three applications concern piping, valves and other components at two pipeline inspection gauge (pig) traps and the mainline pipe between the two traps. The traps were added for safety assurance when the operator was allowed by CER to use a smaller diameter pipe as part of the Mountain 3 deviation. Mountain 3 was the last segment of the pipeline to be constructed because of delays relating to difficult terrain while tunneling. TMX will nearly triple the existing 300,000 b/d Trans Mountain system that connects oil-rich Alberta to the docks in Burnaby, British Columbia. Importantly, the line will provide Canadian oil sands producers with a significant export outlet without having to first go through the US. The "golden weld" marking the end of construction occurred on 11 April, according to Trans Mountain. A group of shippers last week expressed concern that TMX would not be ready for commercial service by 1 May. Spreads 6, 7A and 7B stretching from kilometer post 1075 to 1180 were approved earlier in the week, bringing the total number of approvals up to 39. The expansion was first conceived more than a decade ago with the intention of being operational by late-2017, but that date slipped amid cost overruns and repeated delays. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US crude output rebounds by 4.6pc in February: EIA
US crude output rebounds by 4.6pc in February: EIA
Calgary, 30 April (Argus) — US crude output rebounded by 4.6pc in February after freezing temperatures in the prior month took production offline in the three largest producing states. Output averaged 13.15mn b/d in February, up by 578,000 b/d from January, the Energy Information Administration (EIA) said today in its Petroleum Supply Monthly report. February's production was up by 622,000 b/d from February 2023 but remained short of the 13.3mn b/d record high set in November 2023. North Dakota was hit particularly hard by winter storms in January, which temporarily knocked as much as 700,000 b/d of production offline. The country's third-largest producing state pumped out 1.29mn b/d during February, up by 173,000 b/d from January and 159,000 b/d higher than in February 2023. About 86pc of North Dakota's production was 40.1°API or higher, according to the EIA. Texas, home to more than 40pc of the country's crude production, pumped out 5.55mn b/d in February. This was up by 172,000 b/d from January and 242,000 b/d higher than February 2023. New Mexico, which shares the prolific Permian basin with Texas, also boosted its output in February with 1.98mn b/d of production. This was up by 120,000 b/d from January and up by 183,000 b/d from February 2023. Similar to North Dakota, about 91pc of crude produced in New Mexico was 40.1°API or higher, while in Texas about 55pc of output fell into that category. About 44pc of all crude produced in Texas fell into the relatively heavier 30.1-40°API range. US output in the Gulf of Mexico came in at 1.8mn b/d in February, up from the 1.78mn b/d produced in the prior month but down by 28,000 b/d from February 2023. Almost all the crude produced in the Gulf of Mexico was 40°API or lower. 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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