US prospects for permitting overhaul dwindle
Oil and business groups' hopes that the US Congress could fast-track permitting this year are rapidly fading, with Republicans consumed by infighting and a key Democrat openly flirting with a presidential run.
The prospect of meaningful permitting legislation passing this year was always a long shot, given deep divides on the issue and the current split in the control of Congress. But industry hoped a deal could arise, with Democrats trying to fast-track clean energy projects funded by the Inflation Reduction Act (IRA) and Republicans seeking to remove obstacles to new fossil fuel infrastructure.
Permitting reform advocates concede a deal is unlikely to emerge any time soon, given scant progress on the issue so far, and as Congress heads into an election year where any deal would be much more difficult to pass. "I am not optimistic of anything passing this year," Republican-leaning non-profit Citizens for Responsible Energy Solutions president Heather Reams says.
In another headwind to a possible deal, Democratic West Virginia senator Joe Manchin, who leads the Senate's energy committee, earlier this month said he would not run for re-election in 2024 but will be "travelling the country" to mobilise moderate voters. Manchin has been a top negotiator on permitting and energy issues, including parts of the IRA that restarted oil and gas leasing on federal land and the US Gulf of Mexico. Manchin says he is "absolutely" considering a run for the White House, adding a potential complication to President Joe Biden's re-election bid.
Permitting negotiations had already become stuck in early summer after Congress was able to pass modest permitting changes as part of a bipartisan debt limit law. After the enactment of those changes, the issues left outstanding are more politically thorny, such as energy sector demands for judicial reform to make it harder to bring lawsuits against permitting, or changes to the Clean Water Act sought by the gas sector and opposed by environmentalists and some states.
And the signing of the debt limit law came before far-right Republicans paralysed the US House of Representatives last month by removing Kevin McCarthy as speaker. The infighting shows no sign of easing. House Republicans last week blocked votes on their party's own spending bills. The new speaker Mike Johnson had to rely on Democrats to prevent a government shutdown after 17 November, and Congress is on track to spend the next two months trying to stop a shutdown from 20 January. Far-right House Republicans have held up work as they demand spending cuts and policy changes as a condition to keep the government open.
One event away
Oil and gas executives are holding out hope for permitting changes they say are essential to supporting the industry's growth, including supplying gas to LNG export facilities being developed on the US Gulf coast. An energy crisis, such as a spike in prices, could create the political pressure needed to pass legislation, US gas producer EQT chief executive Toby Rice told an industry conference last month. "We're one event away from something happening. You have one event, you get to reality real quick and you start getting stuff built," Rice said, giving the example ofLNG terminal permitting in Germany after the onset of Russia's invasion of Ukraine.
Congress is set to finish the year having passed some modest permitting tweaks as part of the debt limit agreement. The law will allow the $7.2bn Mountain Valley Pipeline to be completed, enabling the transport of natural gas from West Virginia, and it has expanded the use of "categorical exclusions" that fast-track reviews. But the impasse over broader legislation will put pressure on the White House to pursue changes that allow faster permitting, such as federal initiatives to build out long-distance electric transmission projects to add renewables to the grid.
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Rains persist in Brazil's Rio Grande do Sul
Rains persist in Brazil's Rio Grande do Sul
Sao Paulo, 13 May (Argus) — Downpours that began flooding Brazil's heavily agricultural Rio Grande do Sul in late April persisted over the weekend, continuing to wreak havoc in the state. Rains reached an accumulated 123mm (4.8 inches) on 10-12 May in state capital Porto Alegre, according to Brazil's national meteorological institute Inmet. Some areas experienced around 80mm of rain on 12 May alone, according to US National Oceanic and Atmospheric Administration. Showers in Porto Alegre have reached an accumulated 502mm in May already, according to Brazilian meteorological firm Climatempo. The monthly average is of 111mm. River and lake levels also kept rising. The Guaiba lake, in the state's capital, reached 4.9m (16ft) on Monday morning — up from 4.8m on 10 May, according to the state government. It is considered in a flood stage once it reaches 3m. Most rivers in the state, such as the Gravatai, Taquari and Uruguai, are also above flood levels. A bridge over the Cai River, which links Nova Petropolis and Caxias do Sul cities, broke partially on Sunday. As a result, a stretch of the BR-116 highway is closed, according to the national department of transport infrastructure. The river's levels are 6m above normal. Brazil's national center for natural disaster monitoring and alerts still considers the risk of "new hydrological occurrences" to be "very high" in Rio Grande do Sul and neighboring Santa Catarina state. The extreme weather has left 147 dead and 127 missing, according to the civil defense. Over 538,000 people are displaced. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Banks’ 2023 fossil fuel funding rises to $705bn: Study
Banks’ 2023 fossil fuel funding rises to $705bn: Study
London, 13 May (Argus) — Fossil fuel financing by the world's 60 largest banks rose to $705bn in 2023, up by 4.8pc from $673bn in 2022, with the increase largely driven by financing for the LNG sector. This brings the total funding for fossil fuels since the Paris agreement was signed in 2015 to $6.9 trillion. The 15th annual Banking on Climate Chaos (BOCC) report was released on 13 May by a group of non-governmental and civil society organisations including the Rainforest Action Network and Oil Change International, and it analyses the world's 60 largest commercial and investment banks, according to ratings agency Standard and Poor's (S&P). Funding had previously dropped in 2022 to $673bn from $742bn in 2021, but this was because higher profits for oil and gas companies had led to reduced borrowing. JPMorgan Chase was the largest financier of fossil fuels in 2023 at $40.9bn, up from $38.7bn a year earlier, according to the report. It also topped the list for banks providing financing to companies with fossil fuel expansion plans, with its commitments rising to $19.3bn from $17.1bn in 2022. Japanese bank Mizuho was the second-largest financier, increasing funding commitments to $37bn for all fossil fuels, from $35.4bn in 2022. The Bank of America came in third with $33.7bn, although this was a drop from $37.3bn a year earlier. Out of the 60 banks, 27 increased financing for companies with fossil fuel exposure, with the rise driven by funding for the LNG sector — including fracking, import, export, transport and gas-fired power. Developers have rallied support for LNG projects as part of efforts to boost energy security after the Russia-Ukraine war began in 2022, and banks are actively backing this sector, stated the report. "The rise in rankings by Mizuho and the prominence of the other two Japanese megabanks — MUFG [Mitsubishi UFG Financial Group] and SMBC [Sumitomo Mitsui Banking] — is a notable fossil fuel trend for 2023," the report said. Mizuho and MUFG dominated LNG import and export financing, providing $10.9bn and $8.4bn respectively, to companies expanding this sector. Total funding for the LNG methane gas sector in 2023 was $121bn, up from $116bn in 2022. Financing for thermal coal mining increased slightly to $42.2bn, from $39.7bn in 2022. Out of this, 81pc came from Chinese banks, according to the report, while several North American banks have provided funds to this sector, including Bank of America. Some North American banks have also rolled back on climate commitments, according to the report. Bank of America, for example, had previously committed to not directly financing projects involving new or expanded coal-fired power plants or coal mines, but changed its policy in late 2023 to state that such projects would undergo "enhanced due diligence" and senior-level reviews. The report also notes that most banks' coal exclusions only apply to thermal coal and not metallurgical coal. Total borrowing by oil majors such as Eni, ConocoPhillips, Chevron and Shell fell by 5.24pc in 2023, with several such as TotalEnergies, ExxonMobil and Hess indicating zero financing for the year. The BOCC report's finance data was sourced from either Bloomberg or the London Stock Exchange between December 2023 and February 2024. UK-based bank Barclays, which ranks ninth on the list with $24.2bn in fossil fuel funding, said that the report does not recognise the classification of some of the data. Its "financed emissions for the energy and power sectors have reduced by 44pc and 26pc respectively, between 2020-23," it said. In response to its increase in financing for gas power, "investment is needed to support existing oil and gas assets, while clean energy is scaled," the bank said. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
FTC flexes muscles over US oil mergers
FTC flexes muscles over US oil mergers
New York, 13 May (Argus) — US antitrust regulator the Federal Trade Commission's insistence that the former chief executive of independent Pioneer Natural Resources, Scott Sheffield, be barred from ExxonMobil's board as a condition of approving their $64.5bn merger serves as a cautionary tale for other pending deals. The FTC alleged that Sheffield, a long-time industry leader who made Pioneer one of the biggest producers in the Permian, sought to collude with Opec. It cited hundreds of text messages in which he discussed pricing and output with officials from the oil cartel, as well as efforts to co-ordinate with other Texas producers. The fallout for other transactions still going through the approvals process may be limited, given the specific nature of the allegations against Sheffield, but the FTC's action shows the agency will not hesitate to demand concessions in order to wave deals through. Given heightened political sensitivities to fuel prices in an election year, that should put the industry on notice. At the very least, future reviews are likely to include requests to turn over any records — electronic or otherwise — that involve discussions with competitors or other oil-producing jurisdictions, according to former FTC chairman Bill Kovacic. "It's a reminder that conversations with your competitors about production levels and pricing levels are exceedingly unwise," Kovacic says. It was significant that the FTC did not tamper with the basic fundamentals of the Pioneer acquisition. "I suspect the former CEO is unhappy about being placed on the sidelines," he says. But it is also a "relatively inexpensive price to pay for getting this done". Under the leadership of Lina Khan, the FTC has taken a tougher line when it comes to mergers, and second requests for information have become the norm when it comes to oil deals. Chevron's planned $53bn acquisition of US independent Hess has been held up by such a request, even as a dispute over the target company's stake in a giant offshore find in Guyana has cast a cloud over the transaction. Diamondback Energy's announced $26bn takeover of Endeavor Energy Resources was also subject to a second request. Occidental Petroleum chief executive Vicki Hollub told analysts in February that "some of our teams felt like [the FTC] asked for everything" when going through the approval process for the company's $12bn purchase of CrownRock. But Occidental said this week that its teams are working "constructively" with the regulator, and that the deal is expected to close in the third quarter. Consolidation over consumers? The rapid pace of consolidation in the US oil and gas sector since late last year has led to mounting calls for increased scrutiny on antitrust grounds. "Let's not kid ourselves, these mergers aren't just about efficiency or lowering costs," US Senate Democratic majority leader Chuck Schumer wrote in a letter signed by 50 Senate and House Democrats in March. They are about "buying out the competition so the newly consolidated industry can boost profits at the expense of consumers". Given long-serving company executives' preference to stick around after selling their firms, the FTC's action in relation to Pioneer could theoretically dissuade other ‘big-name' founders from going down the same road, consultancy Rystad senior analyst Matthew Bernstein says. On the other hand, the loss of control for family-owned operators has already served as a big enough obstacle for some companies that would otherwise be seen as takeover targets. As for Sheffield, Pioneer has said the FTC's complaint reflects a "fundamental misunderstanding" of US and global oil markets and "misreads the nature and intent" of his actions. Pioneer more than doubled its daily production between 2019 and 2023, playing its part in adding to domestic energy supply, the firm said. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
German heating oil demand surges as diesel declines
German heating oil demand surges as diesel declines
Hamburg, 13 May (Argus) — German heating oil sales have hit their second highest weekly average this year on the back of falling prices and low household stocks. Daily average traded volumes rose by 45pc last week compared with the previous week, with increases in all regions. Lower prices are the main reason for the growth in demand. The volume weighted average cost of heating oil in Germany was around €79.40/100 litres last week, the lowest since the start of the year. A significant factor behind the low heating oil price is a drop in the value of Ice gasoil futures, which has been driven by a diesel surplus in Europe. Low household stocks are also supporting German heating oil demand. Stocks reached a year-to-date low at the start of May, as in previous years, Argus MDX data shows. In contrast, German diesel sales dropped slightly last week, as an uptick in demand from the agriculture sector was offset by lower-than-expected demand from industry and logistics. There have been some tentative signs of economic recovery that may support diesel demand. Mileage of trucks on German motorways was up on the year in April and 1pc higher than in March, data from the federal statistical office Destatis show. This was the first year-on-year increase since August 2022. Construction activity in Germany rose by 3.9pc in January-March compared with the final quarter of 2023. By Johannes Guhlke Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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