Frontera shuts Peru oil wells on pipeline outage

  • : Crude oil
  • 18/12/03

Canada's Frontera Energy is starting to shut in crude production in Peru because of delays in repairing a severed pipeline in the northern jungle.

Protesters in a small indigenous community cut the 100,000 b/d northern oil pipeline on 26 November. The pipeline owner, state-owned PetroPeru, has been blocked by the community from reaching the remote site in Loreto state, and estimates that at least 8,000 bl may have spilled.

Frontera had been increasing production from block 192 in recent months, reaching 11,430 b/d in November from a year-to-date average of close to 9,000 b/d, according to data from hydrocarbons regulator PeruPetro. The block is located more than 200km from the site of the incident at km 193 in the Morona district.

"It is expected that once access is granted, (pipeline) repairs will be completed in a short time…The Company will provide an update to the market once production from the block resumes," Frontera said this morning in announcing the production cuts in response to the pipeline force majeure declaration by PetroPeru.

The incident coincided with Canadian independent PetroTal's announcement that it will develop block 95, also in the Loreto. The company will need the pipeline to evacuate its future production.

PetroPeru pipeline manager Manuel Ugaz calculated last week that the cost of shutting in production at block 192 is $200,000 a day. The block accounts for around a fifth of Peru´s overall crude production.

Because of the remote location and rough terrain surrounding block 192, moving crude by truck -- which Frontera and other companies do in neighboring Colombia when pipelines are out of service -- is not an option. No other oil companies are affected by the pipeline outage.

The pipeline was initially closed on 17 November, when residents in the Mayuriaga indigenous community kidnapped 20 oil workers, four from PetroPeru and 16 from contract companies, according to the Peruvian police. The perpetrators threatened to set fire to the nearby Morona pumping station. The hostages were released after four days.

"This is not only an environmental crime, but an economic crime. We have been forced to close the pipeline, which harms all Peruvians," said Beatriz Hart, PetroPeru's manager of community relations.

Ugaz described the attack as well-planned and premeditated. He said aerial photos show the spill is not close to any waterways, suggesting that the perpetrators did not want to contaminate local water supply.

The attack is not directly related to PetroPeru – unlike a spill in the community two years ago – but was orchestrated to protest alleged fraud in 7 October municipal elections. The national election board dismissed the allegations.

Protests leaders were unavailable for comment. The community is on its own with the protest, as the indigenous federation grouping Wampi native communities has refused to back the partisan protest. Neighboring communities have also kept silent.

PetroPeru has registered 26 incidents along the aging 1,100km pipeline since early 2016, with 19 caused by some form of sabotage.

Ugaz said most of the incidents have been provoked by residents seeking jobs in remediation, with PetroPeru paying upward to $30/day for labor, much higher than average wages. "It's a perverse way of trying to make money," he said.


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24/06/14

S Africa's ANC, DA agree to form government

S Africa's ANC, DA agree to form government

Cape Town, 14 June (Argus) — South Africa's African National Congress (ANC) and Democratic Alliance (DA) political parties today agreed to form a government while the first sitting of the new parliament was underway. The agreement, which includes the Inkatha Freedom Party (IFP), paves the way for ANC leader Cyril Ramaphosa to be re-elected president. The parties will assume various positions in government broadly in proportion to their share of seats. The government of national unity (GNU) agreement is the result of two weeks of intense negotiations after the ANC lost its long-held majority in the national election on 29 May. It secured 40.2pc of the vote, and the centre-right, pro-market DA retained its position as the official opposition with 21.8pc. The deal scuppers the possibility of an alliance between the ANC and the two largest left-wing parties, MK (uMkhonto weSizwe) and the Economic Freedom Fighters (EFF), which credit ratings agency Fitch warned could pose risks to macroeconomic stability . MK party unseated the EFF in the election to come third, winning 14.6pc of the vote. The EFF secured 9.5pc, and the IFP came a distant fifth with 3.85pc. The MK and EFF are populist parties that campaigned on agendas including wide-scale land expropriation without compensation, nationalisation of economic assets — including mines, the central bank and large banks and insurers — halting fiscal consolidation and aggressively increasing social grants. The GNU parties agreed the new administration should focus on rapid economic growth, job creation, infrastructure development and fiscal sustainability. Other priorities include building a professional, merit-based and non-partisan public service, as well as strengthening law enforcement agencies to address crime and corruption. Through a national dialogue that will include civil society, labour and business, parties will seek to develop a national social compact to enable South Africa to meet its developmental goals, they said. The GNU will take decisions in accordance with the established practice of consensus, but where no consensus is possible a principle of sufficient consensus will apply. By Elaine Mills Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

UK political parties repeat existing stances on energy


24/06/13
24/06/13

UK political parties repeat existing stances on energy

London, 13 June (Argus) — The two main UK political parties have set out their plans, including on energy and climate change, with just three weeks until the general election. Energy security and the cost to consumers is a recurring theme for both, but the manifestos present some marked differences in approach to the energy transition. Both the incumbent Conservative and opposition Labour parties doubled down on existing positions in their respective manifestos. The Conservative party said that it remains committed to the UK's 2050 net zero emissions target, but promises a "pragmatic and proportionate" route. The party's manifesto guarantees "no new green levies or charges while accelerating the rollout of renewables". The UK's net zero goal is legally-binding, and was passed with significant cross-party support under a Conservative government in 2019. The Conservatives have been in power since 2010, and fielded five prime ministers in that time. Recent polling data show a substantial lead for Labour, which performed well at local elections in May. Labour placed strong focus on the opportunity the transition offers, saying that it would place the UK at the "forefront of climate action by creating the green jobs of the future at home and driving forward the energy transition on the global stage". The party has committed to zero-carbon power by 2030, although it would "maintain a strategic reserve of gas power stations to guarantee security of supply", it said. The Conservative manifesto reiterates the party's plans to build new gas-fired power plants. The party had previously committed to a decarbonised power grid by 2035, in line with a G7 pledge, although that is not mentioned in its manifesto. The two main parties clearly diverge on their approaches to North Sea oil and gas production. The Conservatives aim to keep the windfall tax — which effectively results in a 75pc rate — on oil and gas producers in place "until 2028-29, unless prices fall back to normal sooner". Labour confirmed plans to lift the rate to 78pc and run the tax until the end of the next parliament, which is likely to be mid-2029. Labour is also clear that it "will not revoke existing licences" in the North Sea, but it will not issue any new licences — for oil, gas or coal. The Conservatives restated the party's aim to legislate for annual North Sea licensing rounds . Both parties back nuclear energy, including small modular reactors — though those are unlikely to be operational until after 2030. And both pledge to cut planning bureaucracy and tackle grid connections. Labour's plans to "double onshore wind, triple solar power, and quadruple offshore wind by 2030" would result in installed capacity of 31GW, 48GW and 59GW, respectively, from a baseline of end-2023. The Conservatives' target to triple offshore wind by the end of the next parliament would put installed capacity at 44GW in 2029 — below the 50GW target for 2030 set in 2022 — while it said it supports solar and onshore wind in some circumstances. Finance in focus Both parties are keen to pull in private-sector investment, while Labour took up an original Conservative pledge to "make the UK the green finance capital of the world". And both pledge to address the cost of energy for consumers — Labour through local power generation projects and home insulation upgrades, and the Conservatives by ruling out any further "green levies". The latter plans to reverse London's expansion of the ultra-low emissions zone — originally planned by Conservative then-mayor and later prime minister Boris Johnson. Labour said that it would restore a phase-out date of 2030 for new internal combustion engine cars — which prime minister Rishi Sunak in September pushed back to 2035 . On an international level, both parties mention climate leadership at summits such as UN Cops. The Conservatives pledged to "ring-fence" the UK's climate finance commitments, while Labour committed to restore development spending to 0.7pc of gross national income "as soon as fiscal circumstances allow". By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Opec reopens rift with IEA on peak demand


24/06/13
24/06/13

Opec reopens rift with IEA on peak demand

London, 13 June (Argus) — Opec today reopened a rift with the IEA about the future need for oil, calling the Paris-based agency's forecast for peak demand this decade a "continuation of [its] anti-oil narrative." Opec secretary-general Haitham Al Ghais said the IEA's projection , made earlier this week, is a "dangerous narrative" that "will only lead to energy volatility on a potentially unprecedented scale." He made his case in a commentary for consultancy Energy Aspects that Opec made publicly available. This is not the first time the two organisations have clashed over the future trajectory for oil demand growth. When IEA executive director Fatih Birol first floated the idea of a peak demand this decade in 2023, Al Ghais said this was "extremely risky and impractical". Birol and the IEA have been keen to stress that there will be no sharp demand fall beyond its predicted peak year of 2029, and have repeatedly said there will be a gradual decline perhaps over as long as 20 years. Al Ghais said Opec does not see peak oil demand by the end of the decade — he said in January that the scenario "is not showing up in any reliable and robust short- and medium-term forecasts" — and took issue with the IEA's forecasts for demand growth to 2030. The watchdog projects a sharp drop off in growth in 2026 to almost nothing in 2029 and a small contraction in 2030. Al Ghais called this unrealistic. The two bodies' demand estimates have been moving further apart in recent months, with Opec's forecast for growth this year now 1.3mn b/d more than that of the IEA. Birol this week acknowledged this is a "big gap", but was diplomatic when pressed for reasons. "We respect all institutions' forecasts," he said. "We will see at the end of the year what the numbers will be." Criticism of the IEA from the upstream industry has magnified since 2021, when the agency said that 2050 climate goals exclude the need for any new oil and gas fields. Saudi oil minister Prince Abdulaziz bin Salman described this as "la la land" analysis. This year the IEA has come under fire from Republicans in the US Congress who have said the agency is veering into climate advocacy. US industry body API chief executive Mike Sommers said earlier this year the IEA "has become, unfortunately, so politicized that it's just not a reliable source of data any more." By Ben Winkley Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US Fed signals one rate cut this year


24/06/12
24/06/12

US Fed signals one rate cut this year

Houston, 12 June (Argus) — The US Federal Reserve kept its target interest rate unchanged at a 23-year high today while officials signaled they expect to make only one quarter-point rate cut later this year. The Fed board and policymakers, in their latest economic projections, expect the target rate range will end 2024 near a midpoint of 5.1pc, compared with the 4.6pc midpoint projected in March. That implies one quarter-point cut, down from three possible cuts penciled-in previously. "We do not expect it will be appropriate to reduce the target range for the federal funds rate until we have gained greater confidence that inflation is moving sustainably" towards the Fed goal of 2pc, Fed chairman Jerome Powell said after the meeting. "As the economy evolves, appropriate assessments of the policy path will adjust in order to best promote our maximum employment and price stability goals." The Fed's Federal Open Market Committee (FOMC) held the federal funds target rate unchanged at 5.25-5.5pc. It was the sixth consecutive meeting in which the Fed held rates steady following 11 increases from March 2022 through July last year in the most aggressive hiking campaign in four decades. The decision to keep rates steady was widely expected. CME's FedWatch tool, which tracks fed funds futures trading, had assigned a 99pc probability to the Fed holding rates steady today. The FedWatch tool had earlier signaled two rate cuts later this year, but following a better-than-expected inflation report this morning, FedWatch is now indicating three possible rate cuts, beginning in September. The Fed's economic projections see core Personal Consumption Expenditures inflation, the Fed's favorite measure of inflation, ending 2024 at a median forecast of 2.8pc from a prior forecast for 2.6pc. Policymakers see inflation falling to a median 2.3pc next year. The outlook for the unemployment rate for the end of 2024 remained unchanged at 4pc. Policymakers expect gross domestic product (GDP) growth to end the year at 2.1pc, unchanged from prior projections. The latest policy meeting comes as the Consumer Price Index (CPI) eased to an annual 3.3pc in May , down from 3.4pc in April, the Labor Department reported earlier today. Inflation had ticked up to 3.5pc in March from 3.1pc in January, prompting the Fed to turn more cautious about beginning its rate cuts. US job growth has surprised to the upside and continues to top pre-Covid levels. GDP growth slowed to a 1.3pc annual rate in the first quarter, from 3.4pc in the fourth quarter of 2023. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US inflation eases to 3.3pc in May as Fed meets


24/06/12
24/06/12

US inflation eases to 3.3pc in May as Fed meets

Houston, 12 June (Argus) — US consumer inflation eased slightly in May for a second month, a sign Federal Reserve rate hikes are having some success in reining in inflation pressures after a spurt of gains earlier this year. The consumer price index (CPI) slowed to an annual 3.3pc in May from 3.4pc in April, the Bureau of Labor Statistics reported today. So-called core inflation, which strips out volatile food and energy prices, increased by 3.4pc over the past year, the lowest reading in three years, from 3.6pc through April. The energy index rose by an annual 3.7pc, compared to a 2.6pc rise in April, while the gasoline index rose by 2.2pc versus 1.2pc in April. Energy services rose by an annual 4.7pc. Headline inflation had ticked up from 3.1pc in January amid stronger than expected economic data, prompting the Federal Reserve to delay widely expected rate cuts as it pledged it needed to see more evidence of a "sustained" slowing in inflation. The inflation report, which came in slightly under economists' median forecasts, comes hours ahead of a Federal Reserve policy announcement today expected to reveal projections on whether Fed members still expect to begin cutting the target rate this year and by how much. Fed policymakers today are widely expected to keep their target rate unchanged. The Fed hiked its target rate to a 23-year high of 5.25-5.5pc in July 2023 and has kept it there since as it has battled to bring down inflation that hit a high of 9.1pc in June 2022. After the report, the CME's FedWatch tool signaled a 73pc probability that the Fed will cut its target rate in September from near 53pc odds Tuesday. CPI was unchanged from the prior month, the first flat monthly reading in two years, following a 0.3pc monthly gain in April and 0.4pc gains in the prior two months. Core CPI was up by 0.2pc for the month after a monthly gain of 0.3pc in April. The energy index fell 2pc in May on the month after rising 1.1pc the prior month. The food index rose by 0.1pc in May after being unchanged the prior month. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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