China to tighten environmental oversight

Spanish Market: Coal, Crude oil, Emissions, Metals, Oil products, Petrochemicals
12/05/21

China's ministry of ecology and environment (MEE) has issued a new draft regulation aimed at strengthening oversight on approvals of energy-consuming projects, in a sign of tightening environmental control that will have implications for the country's refining sector.

The MEE issued the draft copy seeking public opinion last month, which will require new, revamps and expansion projects to include pilot assessments of the carbon emissions impact of projects in their environmental impact assessment (EIA) reports, the first time it is requiring this. It will start with six energy-intensive industries including thermal power, petrochemicals, coal-to-chemicals, steel, non-ferrous metals smelting and cement.

China's refining, steel, cement, non-ferrous metal smelting, coal-to-chemicals and power sector together contribute some 86.5pc, 44.5pc, 22.7pc of industrial sulphur dioxide, nitrogen oxide and particulate matter emissions respectively, according to the MEE. These industries lack accountability and supervision, as well as a failure to implement local reductions, it added.

The MEE is facing increasing challenges supervising pollution control and is expected to act tough on local governments that fail to act. Its inspection work across 19 provinces last year revealed that several oil and petrochemical, as well as coal-to-gas projects, approved during 2016-20 did not meet environmental requirements as part of their EIA approvals. This include a failure to meet volatile organic compounds (VOCs) control requirements and exceeding of total hydrocarbon emissions, excluding methane, as well as environmental risk prevention measures not matching those specified in their EIA reports.

Problem projects

The MEE's scrutiny of these 19 provinces last year revealed problems in 25 out of 35 "key projects" including state-controlled firm PetroChina's under construction 400,000 b/d Jieyang refinery in Guangdong province and its 260,000 b/d Anning refinery in Yunnan, private-sector firm Shenghong Petrochemical's under construction 320,000 b/d Lianyungang refinery in Jiangsu and private-sector firm Rongsheng's 800,000 b/d Zhoushan ZPC refinery in Zhejiang. They were among the refineries named for failure to implement pollution control measures sufficiently.

The Jieyang project failed to include details such as investment costs for environmental protection facilities for an oil terminal, crude units, a 3mn t/yr delayed coking unit, and other units in its initial design. Rongsheng's ZPC refinery has yet to carry out leak detection and repair work since its start-up in 2019 and several units failed to comply with environmental regulations.

The Jieyang government had failed to fulfil a pledge to reduce atmosphere pollutants including VOCs, nitrogen oxide and sulphur dioxide by an end-2020 deadline in return for the refinery's approval. Shenghong missed a deadline by last December to reduce 2.9mn t of coal consumption, with it reducing just 55pc of this as of March. The MEE also found problems with the design of an oil terminal it is building.

Failure to rectify these requirements may delay their timelines, according to market participants. Shenghong is targeting a 2022 opening and Jieyang is scheduled to start up in the second half of next year.

Stricter measures

The government is expected to implement stricter measures on carbon, nitrogen oxide and sulphur oxide emissions and this is a concern for state oil firms, said an official from a Chinese state firm.

Under the latest draft regulation, local MEE branches will also need to report back on clean-up status and penalties for projects by the end of this month.

Local governments are required to submit pollution control plans for the six industries by the end of July and revisit these plans every six months. Projects that fail to meet deadlines or have undocumented discharge of pollutants will receive penalties, the MEE said.

The MEE has imposed some 1.6bn yuan ($248.6mn) in fines related to pollution violations in the first quarter of this year. The highest number of fines were imposed on Hebei, Jiangsu, Henan, Guangdong and Shandong provinces, forcing some companies to cut output or suspend production.

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25/04/24

US reimposes Venezuela oil sanctions

The US' decision reopens the door for Chinese independent refiners to procure Venezuelan Merey at wide discounts to other crude grades, writes Haik Gugarats Washington, 25 April (Argus) — The US administration reimposed sanctions targeting Venezuela's oil exports and energy sector investments on 17 April, and set a deadline of 31 May for most foreign companies to wind down business with state-owned oil firm PdV. The decision rescinds a sanctions waiver issued in October, which allowed Venezuela to sell oil freely to any buyer and to invite foreign investment in the country's energy sector. The waiver was due to expire on 18 April, with an extension dependent on Caracas upholding a pledge to hold free and fair elections. Venezuelan president Nicolas Maduro's government reneged on that deal by refusing to register leading opposition candidate Maria Corina Machado or an alternative candidate designated by her, a senior US official says. The US considered the potential effects on global energy markets and other factors in its decision but "fundamentally the decision was based on the actions and non-actions of the Venezuelan authorities", the official says. China's imports of Venezuelan Merey — often labelled as diluted bitumen — decreased following the instigation of the waiver in October. Independent refiners in Shandong previously benefited from wide discounts on the sanctioned crude, but they drastically cut back their Merey imports as prices rose. Meanwhile, state-controlled PetroChina was able to resume imports under the waiver. The reimposition of sanctions this month was widely expected and Merey's discount to Ice Brent began to widen in early April, before the decision was announced. Merey's discount to Brent averaged $9/bl in March, but had reached $12/bl by the start of April and $13/bl after the reimposition of sanctions was formally announced. Buyers are expecting final deals for May at discounts of $14/bl or lower, and for prices to drop by a further $3-4/bl in the short term. Longer-term prices for Merey will be influenced by supply and prices for Iranian crude — another mainstay of Shandong independents. Venezuela's crude output reached 850,000 b/d in March, up by 150,000 b/d on the year, according to Argus estimates. PdV has begun looking to change the terms of its nine active joint ventures with international oil companies, in an effort to keep production elevated now sanctions are back in place. Chasing the deadline The end of the waiver will affect Venezuela's exports to India as much as those to China. India emerged as a major destination for Venezuelan crude after sanctions were lifted, importing 152,000 b/d in March. Two more Venezuelan cargoes are expected to arrive in India before the 31 May deadline. The 2mn bl Caspar left Venezuela's Jose port on 14 March and is expected to arrive in India on 26 April, and Suezmax vessel Tinos is due at India's Sikka port on 30 April. Separate sanctions waivers granted to Chevron and oil field service companies Halliburton, SLB, Baker Hughes and Weatherford will remain in place. Chevron can continue lifting oil from its joint venture with PdV, solely for imports to the US. Oil-for-debt deals between PdV and Spain's Repsol and Italy's Eni are expected to be allowed to continue. Repsol imported 23,000 b/d of Venezuelan crude into Spain last year and 29,000 b/d so far this year, according to data from oil analytics firm Vortexa. And a waiver enabling a Shell project to import natural gas from Venezuela's Dragon field to Trinidad and Tobago is expected to remain in place. The US says it would consider other requests for sanctions waivers for specific energy projects. It will consider lifting sanctions again if Maduro's government allows opposition candidates to participate in the July presidential election. The resumption of sanctions "should not be viewed as a final decision that we no longer believe Venezuela can hold competitive and inclusive elections", a US official says. Chinese imports of Venezuelan crude Venezuelan crude exports Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

LNG Energy eyes sanctions-hit Venezuela oil blocks

25/04/24

LNG Energy eyes sanctions-hit Venezuela oil blocks

Caracas, 25 April (Argus) — A Canadian firm plans to revive two onshore oil blocks in Venezuela, but the conditional deals signed with struggling state-owned PdV come just as the US is reinstating broad sanctions on the South American country. LNG Energy Group's Venezuela unit agreed two deals with PdV to boost output in five fields in the Nipa-Nardo-Niebla and Budare-Elotes blocks, which produce about 3,000 b/d of light- to medium-grade crude, the company said on Wednesday. The Canadian company, which operates in neighboring Colombia, would receive 50-56pc of production of the blocks. Venezuela's oil ministry declined to comment. But finalizing the contracts depends on providing required investment to develop the fields within 120 days of the contract signing on 17 April, LNG Energy said. And the signing came on the same day as the US reimposed oil sanctions on Venezuela and gave most companies until 31 May to wind down business. LNG Energy Group said it intends to comply with existing and upcoming US sanctions, noting that the conditional contracts were executed within the terms of the temporary lifting of sanctions — general license 44 — but it will abide by the new license 44A. The reimposition of US sanctions on Venezuela prohibits new investment in the country's energy sector, at the threat of US criminal and economic penalties. "The company will assess in the coming days the applicability of license 44A to its intended operations in Venezuela and determine the most appropriate course of action," LNG Energy said. "The company intends to operate in full compliance with the applicable sanctions regimes." The two blocks are in the adjacent Anzoategui and Monagas states, part of the Orinoco extra heavy oil belt. Most of Venezuela's output is medium- to heavy-grade crude. Both PdV and Chevron have drilling rigs working in those two states, in separate workover and drilling campaigns. Venezuela is now producing above 800,000 b/d, after the US allowed Chevron to increase production and investment under separate waivers. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

MDBs, parties must deliver on finance: Cop 29 president

25/04/24

MDBs, parties must deliver on finance: Cop 29 president

Edinburgh, 25 April (Argus) — Cop 29 president-designate Mukhtar Babayev pointed to insufficient action from multilateral development banks (MDBs) despite encouraging discussions, and urged all countries to play their part to deliver on climate finance negotiations this year. Climate finance discussions will be an important part of climate negotiations this year, having been "one of the most challenging climate diplomacy topics over the years", Babayev said today at the 15th Petersberg climate dialogue in Berlin — a forum for multilateral discussions. The meeting is a key milestone in climate discussions, paving the way for Cop 29 negotiations. The topic will be key as countries must decide on a new global finance goal to replace the $100bn/yr by 2020 pledge to developing countries made in 2009 and missed by developed countries. Babayev said he was working with a range of actors including MDBs, which have a "special role" as "multilateral public finance contributed the single largest part of the [$100bn/yr] target". Babayev said progress from the MDBs was essential, but while he "had many encouraging engagements during the World Bank and IMF spring meetings in Washington last week , we heard a great deal of concern and worry that we did not yet see adequate and sufficient action". "That must change," he said. He also warned that there is no single initiative able to unlock and increase climate finance flows to trillions of dollars, and instead pointed to "many interconnected elements" that countries will need to consider to set this new finance goal — the so-called NCQG. He added that the NCQG working group has already identified many options. "We know that [there are] strong and well-founded views on all sides," he said. "We are listening to all parties to understand their concerns and help them refine official landing zones based on a shared vision of success so we can deliver a fair and ambitious new goal," he added. "We need everyone to play their part so that we can build up unstoppable momentum where everyone is confident that their contribution is fairly matched by the contributions of others". Germany's foreign minister Annalena Baerbock said industrialised countries need to live up to their responsibilities. "Financial contributions from developed countries and multinational development banks will remain the basis of our efforts," she said, confirming that Germany has a €6bn climate goal for 2025. But she also said that "the world has changed" since the UN climate body the UNFCCC established a list of climate finance donors in 1992. The list has just 24 countries, plus the EU, as contributors. "In 1992, the two dozen countries that provided international climate finance made up 80pc of the world's economy. Now, that share is down to 50pc, and the share of all other countries has more than doubled," she said. She urged other countries in the G20, including China, "to join our effort". She pointed out that the donor base was broader for the loss and damage fund — to tackle the unavoidable and irreversible effects of climate change. Cop 28 host the UAE, which is not part of the 1992 list of donors, was the first contributor of the new fund created in Dubai last year. Babayev said that finance will not be the only important topic discussed at Cop 29 and that work must be done to get "the loss and damage fund up and running". Finalising the Article 6 negotiations will also be a key issue. "We cannot leave everything to market mechanisms," he said. By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US economic growth slows to 1.6pc in 1Q

25/04/24

US economic growth slows to 1.6pc in 1Q

Houston, 25 April (Argus) — The US economy in the first quarter grew at a 1.6pc annual pace, slower than expected, while a key measure of inflation accelerated. Growth in gross domestic product (GDP) slowed from a 3.4pc annual rate in the fourth quarter, the Bureau of Economic Analysis (BEA) reported on Thursday. The first-quarter growth number, the first of three estimates for the period, compares with analyst forecasts of about a 2.5pc gain. Personal consumption slowed to a 2.5pc annual rate in the first quarter from a 3.3pc pace in the fourth quarter, partly reflecting lower spending on motor vehicles and gasoline and other energy goods. Gross private domestic investment rose by 3.2pc, with residential spending up 13.9pc after a 2.8pc expansion in the fourth quarter. Government spending growth slowed to 1.2pc from 4.6pc. Private inventories fell and imports rose, weighing on growth. The core personal consumption expenditures (PCE) price index, which the Federal Reserve closely follows, rose by 3.7pc following 2pc annual growth in the fourth quarter, although consultancy Pantheon Macroeconomics said revisions to the data should pull the index lower in coming months. The Federal Reserve is widely expected to begin cutting its target lending rate in September following sharp increases in 2022 and early 2023 to fight inflation that surged to a high of 9.1pc in June 2022. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Australia's MinRes posts higher 1Q spodumene output

25/04/24

Australia's MinRes posts higher 1Q spodumene output

Singapore, 25 April (Argus) — Perth-based major lithium and iron ore producer Mineral Resources (MinRes) has reported higher total spodumene concentrate output from its sites in January-March, and higher spodumene prices later in the quarter. Total attributable spodumene concentrate production of the firm across its assets rose to 170,000 dry metric tonnes (dmt) (see table for detailed breakdown), up by 3.7pc on the quarter and by 63pc on the year, according to the firm's latest quarterly activity report. Total attributable spodumene concentrate shipped volumes fell by 2.9pc on the quarter but rose by 50pc on the year to 166,000dmt. MinRes has an ambitious target of 1mn t/yr of lithium attributable within the next four years, said its managing director Chris Ellison last month during the firm's half-year results presentation. The firm has been aggressively expanding, several delegates told Argus at the Tribeca Future Facing Commodities conference held in Singapore on 26 March. The firm last month agreed to buy fellow developer Poseidon Nickel's concentrator plant in Western Australia as it seeks to retrofit it for lithium processing. MinRes' Mount Marion site saw higher output, driven by higher plant utilisation and improved ore recoveries as the firm continues to advance its plant improvement initiatives. The realised price for spodumene concentrate out of its Mount Marion site was at $718/dmt on a 4.2pc-grade basis, which was above the product's year-to-date fob costs of A$518/dmt ($338/dmt). The realised price translates to $1,048/dmt for 6pc-grade lithium concentrate (spodumene), said the firm. The firm did not process the spodumene concentrate produced from its Wodgina site during the quarter into lithium battery chemicals, citing "prevailing pricing dynamics", but instead resumed spodumene concentrate spot sales. The realised spodumene concentrate price at the site came in at $974/dmt on 5.6pc-grade basis, which translates to $1,028/dmt for 6pc-grade lithium concentrate (spodumene). The lithium battery chemical realised price, excluding value added tax, came in at $11,098/t. MinRes in November 2023 finalised the acquisition of the Bald Hill lithium mine from Alita Resources. January-March was the mine's first full production quarter, hence output was dragged down by limited availability of higher-grade feed, but this is expected to recover in April-June, said the firm. The realised spodumene concentrate price at the Bald Hill site was $878/dmt on 5.1pc-grade basis, which translates to $1,016/dmt for 6pc-grade spodumene concentrate. Argus -assessed prices for 6pc grade spodumene concentrate dipped to $1,080-1,180/t cif China on 23 April, from $1,100-1,200/t cif China a week earlier. Salts producers reduced spodumene bid prices because of a fall in salts prices two weeks earlier. By Joseph Ho MinRes lithium performance Jan-Mar '24 Oct-Dec '23 Jan-Mar '23 Spodumene concentrate production (k dmt) Mt Marion (50pc attributable basis) 91 83 60 Wodgina (50pc attributable basis) 49 55 44 Bald Hill (100pc attributable basis) 30 26 NA Total 170 164 104 Spodumene concentrate shipments (k dmt) Mt Marion (50pc attributable basis) 76 86 62 Wodgina (50pc attributable basis) 64 65 49 Bald Hill (100pc attributable basis) 26 20 NA Total 166 171 111 Lithium battery chemical (t) Wodgina production (50pc attributable basis) 6,793 6,798 3,246 Wodgina sales (50pc attributable basis) 6,954 6,474 1,504 Source: MinRes MinRes previously owned 40pc of the Wodgina project, which increased to 50pc starting from 18 October 2023. Figures for Wodgina before 18 October 2023 were on 40pc attributable basis. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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