Cop: Brazil wants more debate on fossil fuel phase out

Spanish Market: Crude oil, Emissions, Natural gas
05/12/23

The phasing out of fossil fuels is a "huge" topic at the Cop 28 UN climate summit and still needs to be clearly debated, according to Brazil's chief climate negotiator Andre Correa do Lago.

The discussion has domestic and international dimensions, do Lago said, adding that the current international debate over whether fossil fuels should be phased out lacks structure. "People are talking about consumption, about abatement and many different solutions and proposals," he said. "I think this has to be very clearly debated".

Among those countries that support the inclusion of language on fossil fuels in the negotiated Cop text — whether it be a phase out or phase down, unabated or all — there is currently no united position, and this could undermine the discussions.

Do Lago also called for national debates on fossil fuels to see "what countries can do individually in their territories". He suggested that Brazil needs to have a democratic discussion on the topic. "We have to have a very important debate in Brazil to see how we deal with this issues internally," he said, adding that international and domestic discussions need to happen in parallel.

Meanwhile, Brazil's deputy minister of environment and climate change Joao Paulo Capobianco called for a dialogue between oil and gas producing countries, including discussions on alternatives to oil. Brazil has some strong options such as biofuels and green hydrogen, he said.

"I don't believe that the voluntary action of one country alone is enough, what we need to do is to have an international understanding if we are going to discuss phasing out fossil fuels," Capobianco said. "This is something we are willing to discuss but we need to consider alternatives".

Brazil's oil and gas production was 4.5mn b/d of oil equivalent (boe/d) in October, according to the country's hydrocarbons regulator ANP. At the Cop 28 summit last week, Brazilian president Luiz Inacio Lula da Silva said his country will join the Opec+ alliance to urge other oil-producing nations to move away from fossil fuels to more sustainable alternatives. But despite the government's push to increase investment in renewable energy, Lula's administration is working to develop oil and gas reserves in the environmentally sensitive Equatorial Margin off the coast of the Amazon forest.

Brazil said it wants to use oil revenues to finance clean energy development. It is aiming to cut greenhouse gas (GHG) emissions by 48pc by 2025, from a 2005 baseline — equivalent to 1.34bn t CO2e — and by 53pc by 2030. Capobianco stressed that Brazil is working on deforestation to help hit its emissions reduction targets and is also developing plans for all GHG emitting sectors, citing progress in the agribusiness sector.

Deforestation in Brazil's Amazon basin fell by 22.3pc from August 2022 to July 2023, compared with a year earlier, according to data released by Brazil's national institute of space research. Deforestation in August 21 to July 2022 was 11pc lower than a year earlier.

By Caroline Varin

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16/01/25

Trump tariffs may move gas prices, not flows

New York, 16 January (Argus) — US president-elect Donald Trump's threat to impose 25pc tariffs on all imports from Canada would likely raise US natural gas prices if enacted, but not by enough to significantly alter flows across the border. As anxiety over US-imposed tariffs mounted over the past week, gas prices for February delivery on the Pacific coast of southern Canada began trading at a steeper discount to their US counterparts. The February price at Westcoast station 2, a key indicator of western Canadian gas prices, on Wednesday was at a $4.38/mmBtu discount to northwest US gas hub Northwest Sumas, compared with a $3.43/mmBtu discount a week earlier. The February price at Canadian benchmark NIT/AECO on Wednesday also moved to a $2.56/mmBtu discount to the US benchmark Henry Hub in Louisiana from a $2.22/mmBtu discount a week earlier. While other factors could be at play, the wider Canadian discounts line up with a shift in sentiment by Canadian oil and gas groups and politicians over the past week, as those groups coordinate to try and halt the threatened tariffs. "They're likely to come in on January 20th," Danielle Smith, premier of Alberta, a major oil and gas-producing Canadian province, said of the tariffs this week. The attitude is starkly different from a month earlier, when Michael Rose, chief executive of Tourmaline Oil, the largest Canadian gas producer, said at a Goldman Sachs energy conference that he thought there was a "low likelihood" that the tariffs would be imposed. "We'd agree with you," replied Goldman Sachs head of gas research Samantha Dart. But while US-Canadian gas price spreads would widen if gas were not exempted from Trump's tariffs, the western US would probably not reduce purchases of Canadian gas, because "there's nowhere else for them to get the supply," FactSet senior energy analyst Connor McLean said. Moreover, even with a 25pc price increase, Canadian gas is still highly competitive against US-sourced gas and alternative power generation sources like coal. This is also the case for the US' upper midcontinent and east coast, though gas buyers in those regions could also source gas from Appalachia, Oklahoma or the Rockies if there were spare pipeline capacity. The effect of tariffs on gas prices would also probably be dwarfed by more humdrum market dynamics, like the weather. Demand-boosting cold weather this month has quickly drawn down US gas inventories, which appear slated in the coming weeks to flip to a deficit to the five-year average for the first time in more than two years. Even colder weather early next week is also likely to trigger freeze-offs, which are production curtailments caused by extreme cold. Given those more pressing concerns, "tariffs do not come up" in meetings with other market participants, Appalachian gas producer Seneca Resources marketing manager Rob Lindroos told Argus . Approximately 99pc of US gas imports are from Canada via pipeline, with flows into the US averaging 8 Bcf/d (227mn m³/d) in 2023, according to the US Energy Information Administration. Those Canadian sales, accounting for nearly half of western Canada's production, provide crucial energy supplies to the US Pacific northwest and midcontinent, parts of which are far from US reservoirs. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Mexico’s oil states led labor market losers in 2024

16/01/25

Mexico’s oil states led labor market losers in 2024

Mexico City, 16 January (Argus) — Mexico's oil and gas-dependent states led state job losses in 2024, driven by a sharp contraction in spending by state-owned Pemex and the completion of the Olmeca refinery, according to energy market sources and state data, even as two-thirds of the country's states posted job growth. Annually, the total employment in Mexico grew by 213,993 jobs in 2024, 67pc fewer than the 651,490 jobs added in 2023, according to the Mexican social security (IMSS) institute's tally of formal jobs, which have full benefits like better access to housing credits and public medical services. The deceleration in the number of jobs created last year adds to signals of a Mexican economy that was cooling as the year progressed, according to economists and energy market sources. "In 2024, the second lowest generation of jobs in the last 15 years was recorded, only after 2020, the year in which the Covid-19 pandemic hit," according to a report from Mexican think tank Mexico Como Vamos. Tabasco state, one of the most important for the energy sector in Mexico, led the reduction in employment among the 11 states that experienced job losses during 2024. Tabasco lost 28,675 jobs over the year, for a 12pc annual decline in employment in the state, according to IMSS data. Twenty-one states, including the capital, posted job growth. Campeche, the state with the second biggest annual percentage of job losses, and Tamaulipas, the other state with a high dependence on the oil sector, also reported significant declines in 2024, with annual formal job losses of 5,952 and 3,120, representing 4pc and 1pc decreases from a year earlier, respectively. These IMSS figures only account for formal jobs registered with the institute, which provide access to medical, pensions, and housing credits, and totaled 22.24mn as of December. The official statistics agency Inegi counts employment nationwide at 59.5mn as of the third quarter last year. Inegi's count of employment includes the informal sector, made up of jobs without social security and other benefits. Inegi's estimates put the informal labor sector at over 54pc of all jobs. According to IMSS, the country lost 405,259 jobs in December compared with November, the largest loss recorded for that month since 2000. Still, December is typically marked by heavy job losses because of seasonal adjustments. But last year the final month's tally was pulled even lower than normal by overall weak hiring over the year, Inegi said, even as total job growth was positive for the full year. While the labor situation in Mexico worsened in 2024 because of the weakening of the national economy, including a sharp depreciation of the peso to the dollar, the decline has hit the states most closely tied to the oil and gas sector and Pemex spending, said Carlos Ramirez, founder of consultancy Integralia. Tabasco hangover "Tabasco benefited greatly from the investment poured into Pemex by the administration of AMLO (former president Juan Manuel Lopez Obrador), Ramirez said. "This is going to change now with the (Claudia) Sheinbaum administration, and the state will suffer a hangover as the new government reduces its support for the oil and gas industry." Still, the national unemployment rate is low, at 2.6pc in November, according to Inegi. And the country added 361,000 jobs in the third quarter from a year earlier, according to Inegi's broader base of data. But the economy was slowing in the second half of 2024. Growth in gross domestic product slowed to an annual 1.6pc in the third quarter from 2.1pc in the second quarter, according to Inegi. Inegi's IGAE, an index that tracks the real economy, showed that the Mexican economy contracted 0.73pc in October, as economists lowered growth estimates for the Mexican economy for this year. Pemex chief executive Victor Rodriguez in early October implemented a 20pc cut to the company's upstream budget, aiming to save Ps26.78bn ($1.32bn). This decision, combined with delays in payments for contracts and a halt in new service agreements, severely impacted local companies in Tabasco and Campeche, according to oil services company association Amespac. Some companies announced layoffs as Pemex's financial constraints rippled through the supply chain. Part of Tabasco's workforce reduction could also be tied to the near-completion of the 340,000 b/d Olmeca refinery, said Jesus Carrillo, an analyst at think tank IMCO. While the major construction phases have concluded, the facility remains in a testing phase, contrary to Pemex's previous promises of full operations in 2024. Despite the recent downturn, heavy Pemex spending during the administration of former president Lopez Obrador made Tabasco the leading state in job creation between December 2018 and December 2024, Ramirez said. But with the refinery now completed and Pemex projecting further budget cuts for 2025, analysts expect labor market challenges in oil-reliant states to persist. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU gas stockdraw in first half of Jan at four-year high

16/01/25

EU gas stockdraw in first half of Jan at four-year high

London, 16 January (Argus) — European firms boosted gas withdrawals in the first half of January to meet stronger heating-related demand and compensate for the drop in Russian supply following the end of Ukrainian transit. The European gas stockdraw has accelerated since the turn of this year. Combined EU withdrawals averaged 6.57 TWh/d on 1-15 January, the quickest stockdraw for the period since 8.7 TWh/d in 2021 and up from 4.1 TWh/d in the second half of December, according to GIE transparency platform data. Cold weather has boosted heating demand across much of the continent, particularly in recent days, increasing the call on stocks. Overnight lows in Paris, Milan, Essen and Amsterdam were 2-4°C below the seasonal average on 10-14 January. Quick withdrawals drew combined EU stocks down to 736TWh — 64pc of capacity — on the morning of 15 January. This is down from an average 908TWh and a 80pc fill level on the same date in 2023-24, but still above the 2021-22 average of 620TWh and 56pc of capacity. German withdrawals has been particularly strong over the past week. Withdrawals doubled to 2.4 TWh/d on 8-15 January from 1.2 TWh/d on 1-7 January. The quick stockdraw helped support exports to countries affected by the end of Russian transit gas on 1 January. Inflows of German gas to Austria at Oberkappel and the Czech Republic at VIP Brandov have risen to nearly 300 GWh/d in the first half of this month from a combined 48 GWh/d in December. These countries have also turned to underground reserves to compensate for the lost Russian supply. Austria withdrew 515 GWh/d on 1-15 January, up from 360 GWh/d in December. The stockdraw in the Czech Republic averaged 210 GWh/d on these dates, inching up from 205 GWh/d, as German imports compensated for a larger share of Russian flows . In northwest Europe, high weather-related UK demand pushed UK NBP prompt prices far above the Peg and ZTP, encouraging firms to direct Norwegian supply to the UK instead of France and Belgium. This led to slower Norwegian gas flows to France, which in turn contributed to the higher call on French underground storage. Firms also may have used withdrawn volumes to boost exports to Belgium, as high UK demand weighed on supply from the UK to Belgium on the Interconnector pipeline. The French stockdraw averaged 950 GWh/d on 1-15 January, up from a three-year average of 880 GWh/d for the period. Among countries with the largest storage capacity, the Netherlands has the lowest stocks in percentage terms. Its underground sites stood at 48pc of capacity on the morning of 15 January. Further south, the Italian stockdraw ramped up over the past week to help meet strong consumption and to make up for slower receipts from the Trans Adriatic Pipeline (Tap) after a partial outage at Azerbaijan's Shakh Deniz field. Spain has only 1.2TWh from which it can draw, with another 26TWh in storage that form the state-controlled strategic reserves and can be used only under certain conditions. But quick LNG imports so far this month have rapidly boosted the country's available supply, with LNG stocks having reached 11.2TWh on 15 January after reaching a seven-year low of 6.5TWh on 24 December. The pace of EU withdrawals will continue to largely follow changes in heating-related consumption for the remainder of January. And cold weather today was forecast to persist across much of Europe, with overnight lows in Amsterdam, Paris, Essen, Milan and Madrid anticipated to hover at 1-4°C below seasonal values over much of the next week. While heating-related consumption is likely to remain strong in the coming weeks, wider LNG supply availability could alleviate the call on storage. Several cargoes so far this month have diverted away from Asia towards higher-priced European markets, which may support LNG sendout in the continent later this month. By Isabel Valverde Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

EU 'unlikely' to submit new climate plan to UN in time

16/01/25

EU 'unlikely' to submit new climate plan to UN in time

Brussels, 16 January (Argus) — The European Commission is "unlikely" to present the EU's new climate plan including greenhouse gas (GHG) emission reduction targets for 2035 to the UN by the February deadline, according to EU climate commissioner Wopke Hoekstra. "We need a target for 2035 when we walk into [the UN Cop 30 climate summit in] Belem," said Hoekstra. "Whether we have that in February, I think, is unlikely," he said. Countries party to the UN Framework Convention on Climate Change (UNFCCC) must submit their nationally determined contributions (NDCs) — emissions-cut targets — for 2035 by February. Hoekstra added that the commission will have an "ambitious" 2040 target from which it will derive the bloc's 2035 target. He noted an obligation towards parliament to come up with the 2040 target this calendar year. In December, Hoekstra had told EU environment ministers that the legal proposal for 2040 GHG cuts will come " sooner rather than later ". The commission should in February put out new policy documents on clean industry, affordable energy, and roadmap towards ending Russian energy imports as well as on agriculture. Hoekstra indicated that the commission is looking once again at the carbon border adjustment mechanism that is an "important add-on to prevent carbon leakage" from the bloc's emissions trading system (ETS). "We are indeed going to look into both exports but also simplification," Hoekstra said. The commissioner said that he still "needs to see" whether decarbonisation contracts will also be proposed as part of the forthcoming clean industrial deal, now due on 26 February. Shaky start The EU, alongside Canada, Mexico, Norway and Switzerland, has committed to submitting an NDC with " steep emission cuts " that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. Hoekstra reiterated today the need for "reciprocity" on climate goals from other nations. Cop 28 host the UAE and Cop 30 host Brazil have already submitted their new NDCs, and the UK set a target to cut all greenhouse gas (GHG) emissions by at least 81pc by 2035, from a 1990 baseline during the Cop 29 summit last year. But, although Canada was planning to submit its new plan by February, the planned resignation of prime minister Justin Trudeau and a new election due this year could put the country's climate ambitions at risk. Canada in December set a new 2035 climate goal, aiming to reduce its greenhouse gas emissions by 45-50pc by 2035, from a 2005 baseline. Similarly, US president Joe Biden's administration has at the end of last year set a new GHG emissions reduction target for the world's second largest emitter — pursuing economy-wide emission cuts by 61-66pc below 2005 levels by 2035. The country has already submitted a new NDC, but the move is unlikely to hold much weight with president-elect Donald Trump taking office later this month. Some countries including Indonesia and Brunei have highlighted challenges in providing new targets, such as the lack of common models between sectors, financing and economic growth. Colombia indicated that it will submit its NDC by June next year at the country seeks to address the "divisive issue" of fossil fuels, on which its economy is dependent. By Dafydd ab Iago and Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Danish Tyra gas field back on line

16/01/25

Danish Tyra gas field back on line

London, 16 January (Argus) — The Danish Tyra field came back on line today, following the early completion of maintenance by operator TotalEnergies. The field returned to operation at 01:00 CET (12:00 GMT) today, TotalEnergies said in a Remit message, earlier than the scheduled end date of 18 January. The Tyra field first went off line on 5 January because of issues at a compressor station. The end of the commissioning period for the 8.1mn m³/d hub remains 31 January, having been delayed from 21 January in connection with the works. The firm expects Tyra to reach plateau capacity in the second half of January. Half of the Tyra hub's wells still needed to be brought on line, Tyra stakeholder BlueNord said last week. By Lucas Waelbroeck Boix Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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