COLOMBIA

  Ecopetrol

Ecopetrol and Petrobras report deepwater gas discovery

Kim Biggar, August 1, 20220

Colombia SOC Ecopetrol and Brazil SOC Petrobras confirm the discovery of a natural gas accumulation in the Uchuva-1 exploratory well, drilled in deep water off Colombia, 32 kilometres offshore and 76 kilometres from the city of Santa Marta, at a depth of approximately 830 metres. The Uchuva well is in the Tayrona block, in which Petrobras is the operator with a 44.4% stake and Ecopetrol has the remaining 55.6%.

The discovery is a result of actions to enhance use of data through the application of new technological solutions in geology and geophysics, added to expertise in deepwater operations. It increases the likelihood that the consortium will further develop exploration and production activities in the northern part of the Colombian Caribbean. The consortium will continue to assess the dimensions of the gas accumulation in the Tayrona block,

 

Ecopetrol eyes nearby infrastructure for potential Colombia development of  their recently announced natural gas discovery in the Tayrona block offshore Colombia

4 August 2022
By Fabio Palmigiani in Rio de Janeiro

Colombian SOC Ecopetrol is analysing the use of existing infrastructure in the Caribbean to assist in the potential development of the Uchuva-1 natural gas discovery.  Ecopetrol and project partner Petrobras of Brazil announced in late July a gas discovery in the Tayrona block offshore Colombia with the drilling of the Uchuva-1 prospect.

“Uchuva opened up a new gas province in the north of the Colombian Caribbean,” Ecopetrol chief executive Felipe Bayon told investors in a conference call.

Shell strikes natural gas off Colombian Caribbean coast

European player and Ecopetrol unlock gas province in ultra-deep waters

Fossil fuel investment resurgence amidst European energy crisis –
With conflict in Ukraine and sanctions on Russia continuing to exacerbate supply issues, rising energy prices are fuelling new opportunities for private equity in the European oil and gas industry.

15 August 2022
Fabio Palmigiani in Rio de Janeiro

European supermajor Shell made a natural gas discovery in the ultra-deep waters of the Colombian Caribbean.

The announcement comes a few days after Brazilian oil giant Petrobras declared that it had found gas further to the northeast in the Tayrona block.

Shell and project partner Ecopetrol of Colombia drilled the Gorgon-2 appraisal well on Block COL-5 in about 2400 metres of water with the Transocean drillship Deepwater Thalassa.

A fossil fuel investment resurgence amidst Europe’s energy crisis?

With conflict in Ukraine and sanctions on Russia continuing to exacerbate supply issues, rising energy prices are fuelling new opportunities for private equity in the European oil and gas industry.industry.

CUBA

Melbana close to target at second Cuban well

MELBANA Energy will case over 1000 metres of open hole at its Zapato-1 sidetrack well onshore Cuba, where drilling has reached 2300 metres measured depth. At that point the drillbit was retrieved after it had been drilling through hard rock.

Several logging runs were conducted and the operators will now run the 9-5/8″ casing.

Melbana will begin drilling ahead in 8-1/2″ casing by the weekend.

 

VENEZUELA

4.6 magnitude earthquake

Aug 20 2022

The Seismic Research Centre of the University of West Indies (UWI-SRC) recorded an earthquake of 4.6 magnitude at about 1:17 am on Saturday 20 August 2022.

According to the UWI-SRC preliminary report, the earthquake was located at Latitude 10.93-degrees-North, and Longitude 62.18-degrees-West, just off the north-eastern coast of Venezuela at a depth of 88 kilometres.

It would have been felt in Port of Spain, given its magnitude of 4.6 and its epicentre was 80 km north-west of the Trinidad capital, confirmed by at least one person .
The epicentre was some 105 km West-North-West of Arima and one person in St Augustine (17 km west of Arima) who reported feeling it to the Seismic Research Centre.

 

Young visits Maduro

Aug 06 2022

TT Minister of Energy Stuart Young went to Venezuela on an official visit to review cooperation agreements and the strategic alliance.  President of Venezuela, Nicolás Maduro and Minister Young addressed the strengthening of bilateral cooperation relations in Caracas.

According to a press release from the Venezuelan Ministry of Communication and Information, the representatives of both parties “consolidated their ties of cooperation, complementarity and solidarity. In recent months, in energy matters, both countries have expressed their desire and commitment to reactivate energy cooperation, and particularly the Government of Trinidad and Tobago has proposed the search for formulas for the normalization of gas and oil supplies at world level.”

Also present at the meeting were the Ambassador of Trinidad and Tobago, Edmund Dillon; the Venezuelan Foreign Minister Carlos Faría; the sectorial Vice-President of Economy, Tareck El Aissami; and the President of Petróleos de Venezuela (PDVSA), Asdrúbal Chávez.  Previously, Minister Young held a meeting with Faría and El Aissami to continue promoting economic and commercial growth.

TT remains committed to development and processing of natural gas from Venezuela’s Dragon field since it signed an agreement with the Maduro administration in August 2018. Exploration has been stalled by US sanctions against Venezuela.

TT Ministry of Energy issued a statement on the matter:

“The Honourable Stuart R Young, M.P., Minister of Energy and Energy Industries and Minister in the Office of the Prime Minister visited Caracas, Venezuela on Friday 5th August, 2022 where he conducted a number of high level meetings with key members of the Bolivarian Republic of Venezuela’s Government.

The Minister ended his day of official meetings by meeting President Nicolás Maduro at Miraflores Palace in Caracas along with key members of his Cabinet. Minister Young’s discussions throughout the day surrounded matters of energy, security and other matters of national interest to both neighbours.”

Op-Ed: The role of Algeria, Egypt, and Nigeria in Africa’s search for European gas market share

August 04, 2022

NJ Ayuk, Executive Chairman, African Energy Chamber

The curtailment of Russian natural gas deliveries is a source of anxiety for the European Union — and rightly so, given that the bloc has been far too dependent for far too long on Gazprom, a majority state-owned Russian company that serves as a de facto instrument of policy for the Kremlin. But this anxiety is also a source of potential for African gas producers, as it’s driving European consumers to look elsewhere for fuel.

This search has drawn attention to a number of African gas projects that are likely to help Europe in the future, particularly as the EU looks to make a permanent shift away from dependence on Russian gas. Both Tanzania and Mozambique, for example, are planning large-scale offshore development schemes that will support liquefied natural gas (LNG) plants capable of sending large volumes of fuel to European markets toward the end of the decade.

The Republic of Congo hopes to fast-track a medium-scale modular project that may begin production a few years sooner. Meanwhile, there are other greenfield initiatives under discussion in Mauritania and Namibia, and several international majors have banded together to bring new fields online to facilitate LNG production in Angola.

These projects are all exciting and new.

For the time being, though, they’re not going to have much concrete impact on the European energy balance.

That’s because they can’t.      They’re not ready yet.

The Timeline for African Gas

These projects have great potential, but their potential is yet to be realized. In countries such as Tanzania and Mozambique, we know the gas is there because international oil companies (IOCs) have seen it, measured it, analyzed it, and tested it; they just haven’t time yet to drill all the development wells and build all the infrastructure needed to extract it and turn it into LNG for export. In the Republic of Congo, we know the gas is there, and the Italian major Eni is already extracting it — just not on a scale that can immediately serve buyers in Europe or local power plants.

These obstacles can be overcome. The gaps can be filled in, the wells drilled, the pipelines connected, the gas liquefaction plants constructed, the tankers chartered. But it will take time — years, not weeks or months — to arrange the necessary financing, sign the necessary contracts, gather the necessary materials, and so on.

This doesn’t mean, though, that Africa can’t play a role in helping the EU shed its reliance on Russian gas in the short term. Absolutely not!

The Importance of Existing Capacity

But much of that assistance, at least in the short term, is going to come from existing capacity, that is, from the places in Africa that are already turning out gas for export to Europe. Above all, it’s going to come from these three countries: Algeria, Egypt, and Nigeria, which will account for fully 80% of African gas yields between 2022 and 2025, according to the African Energy Chamber’s State of African Energy Q2 2022 Report, drawn up in consultation with Rystad Energy. (Algeria, Egypt, and Nigeria will also account for about 60% of the continent’s total LNG production capacity during the same period, even as construction moves ahead on new facilities, the report says.)

These three states are already known to be the largest gas producers in Africa. According to the 2022 edition of BP’s Statistical Review of World Energy, they accounted for just a bit over 83% of the 257.5 billion cubic meters (Bcm) of gas extracted in Africa in 2021 (for context, that’s roughly the equivalent of all of the gas consumed by Iran in one year), with Algeria contributing 100.8 Bcm (or more than 39% of the total), Egypt 67.8 Bcm (more than 26%) and Nigeria 45.9 Bcm (nearly 18%).

What’s more, they also account for the vast majority of Africa’s gas liquefaction capacity of about 75.3 million tons per annum (Mtpa), with Algeria contributing 29.3 Mtpa, Nigeria 22.2 Mtpa, and Egypt 12.2 Mtpa. Algeria and Egypt have the only operational LNG plants in North Africa, while Nigeria is home to a plant that makes up nearly 66% of sub-Saharan Africa’s total LNG production capacity of 33.8 Mtpa.

Algeria, meanwhile, doesn’t just have LNG; it also has pipelines. It’s already using two of them — the Medgaz and TransMed systems — to pump fuel directly to Spain and Italy across the floor of the Mediterranean Sea. Together, these two pipes are capable of handling up to 40 Bcm per year of gas.

The good news is that Algeria, Egypt, and Nigeria are already supplying a good bit of the gas that Europe has been using to supplement Russian supplies. Even better, they also have enough spare capacity that their plans for raising production within the next few years are realistic.

Shows of confidence

Italy’s Eni — and the Italian government, which has a controlling share in the company — is equally confident in these countries’ potential to help meet European gas needs, as evidenced by the decision to turn to Algeria and Egypt in the search for alternatives to Russian gas. Both Italian government officials and Eni executives have traveled to Egypt and Algeria since Russia’s invasion of Ukraine in late February to negotiate and sign new supply deals.

Likewise, French oil major TotalEnergies recently extended its commitment to a project in Algeria’s North Berkine basin, partly with the aim of finding ways to export associated gas from its oil fields to Europe. They had good reasons to make these decisions — and good reasons to expect them to pay off in the near term!

It’s worth noting, of course, that Africa can help compensate for some of the difference and not all. It can’t serve as a substitute source for the entire volume of 155 Bcm that Russia delivered to the EU in 2021! But it can play a key role in this process — and it doesn’t have to wait to start doing so.

 

 

ENERGY TRANSITION

world’s first auction for floating wind-fuelled oil and gas projects

By Darius Snieckus in Ottawa

Highly anticipated Innovation and Targeted Oil & Gas leasing round launched by Crown Estate Scotland to build ‘small-scale’ deep-water arrays to decarbonise North Sea hydrocarbon production

The world’s first auction focused on the development of floating wind power projects that would be purpose-built to decarbonise operational offshore oil and gas fields has been unveiled by the Scottish arm of UK seabed landlord the Crown Estate.

The “two pot” Innovation and Targeted Oil & Gas (INTOG) leasing round is open to developers aiming to build “small-scale” sub-100 megawatt deep-water wind arrays linked to North Sea hydrocarbon production platforms, as well as for projects that will provide green power to existing oil and gas infrastructure to cut emissions.

OPEC

Andreas Exarheas|Rigzone Staff|

August 04, 2022

The 31st OPEC and non-OPEC ministerial meeting, offered several warnings, including the identification of  a “severely limited availability of excess capacity”.

The group noted that this limited availability of excess capacity “necessitates utilizing it with great caution in response to severe supply disruptions”. The group also warned that “chronic underinvestment” in the oil sector has reduced excess capacities along the value chain and outlined that dynamic and rapidly evolving oil market fundamentals necessitated “continuous assessment” of market conditions.

“Insufficient investment into the upstream sector will impact the availability of adequate supply in a timely manner to meet growing demand beyond 2023 from non-participating non-OPEC oil-producing countries, some OPEC Member Countries and participating non-OPEC oil-producing countries,” a statement posted on OPEC’s website noted.

Preliminary data for OECD commercial oil stocks level stood at 2,712 mb in June 2022, which was 163 mb lower than the same time last year, and 236 mb below the 2015-2019 average. Emergency oil stocks reached their lowest levels in over 30 years.

At the latest meeting, OPEC+ decided to increase its production by 0.1 million barrels per day in September. According to a production table published on OPEC’s website, “required production” in September 2022 will be topped by Saudi Arabia and Russia, with 11.030 million barrels per day, each. Iraq’s required production is next highest in the table at 4.663 million barrels per day, followed by Kuwait at 2.818 million barrels per day.

At a previous meeting on June 30, the group reconfirmed its decision to increase its monthly overall production by 0.648 million barrels per day in August. OPEC+ is scheduled to hold its next meeting on September 5.

In a press briefing, White House Press Secretary Karine Jean-Pierre was asked if President Joe Biden felt like the production increase was an insult, “given what the President has invested”. Responding to the question, Jean-Pierre said, “the fact of the matter is that oil and gas prices are coming down. They have been coming down since the President announced his trip. The moment he announced his trip, we saw gas prices and oil prices coming down. And so that is also important to note. We’re not members of OPEC – of OPEC+, but we welcome … their announcement.”.

Last month, Enverus Intelligence Research cautioned about the limited benefits Biden’s trip to the Middle East would have on increased oil production or changes to crude prices.

andreas.exarheas@rigzone.com

OPEC output rise too low

4 AUGUST 2022

Trinidad and Tobago Energy Minister Stuart Young and former energy minister Kevin Ramnarine differeed about a decision by the Organisation of Petroleum Exporting Countries (OPEC) and its allies to slightly raise its output next month. OPEC announced it will produce an additional 100,000 barrels of crude oil per day in September. OPEC is currently producing 31.7 million barrels of crude oil per day (bpd).

Young said, “.. high prices for oil .. leads to high prices for fuel. These affect global supply chains and global inflation.”

The current volume of crude oil traded on the world market is approximately 2.8 billion barrels. Brent and West Texas Intermediate crude oils traded at US$97.92 and US$91.77 per barrel respectively. Natural gas was trading at US$8.14 per mmbtu.

Young observed a pattern in recent days where oil prices have been below US$100 per barrel.

“This announcement by OPEC can be expected to affect oil prices, the questions would be to what extent and for how long. The increase of 100,000 bpd is not huge. We are all conscious about global inflation and how it affects us.”

With TT’s economy being more dependent on natural gas than oil, Young said, “We continue to see high prices for LNG, ammonia, urea, UAN and methanol. So Trinidad and Tobago will continue to derive revenue benefits whilst (gas) prices remain high.”

It was too early at this stage to tell whether the proposed OPEC rise in output will affect domestic fuel prices.

“This small increase of production may not have a significant effect on global oil prices, only the passage of time will tell. We will have to see if fuel prices go down.”

On April 21, the Prime Minister said if world oil prices decrease, domestic fuel prices will fall.

“Yes, the trigger point will be made known to the population and if the price goes down, the same way we have raised it because of the subsidy, it is reasonable to expect that significantly, the price at the pumps will go down. That is something that we will do… they will say when the price goes up it goes up very quickly but it defies gravity when the price has to go down. These are things the market price will deal with.”

On April 8, Finance Minister Colm Imbert announced an increase in fuel prices effective April 19.

Prices of premium gasoline and super gasoline were adjusted by $1 per litre to $6.75 and $5.97, respectively. The price of diesel was adjusted by 50 cents to $3.91 per litre. The price of kerosene was adjusted from $1.50 to $3.50 per litre. The price of liquefied petroleum gas (LPG) remains fixed at $21 for a 20lb cylinder of cooking gas for domestic customers.

Ramnarine said, “The question is why would OPEC agree to increase output by what is a miniscule amount.”

He estimated that the 100,000 bpd increase to be approximately 0.1 per cent of global demand.

“This increase is likely a snub to the requests by the United States for OPEC to increase its production and thus help combat high oil prices.”

With the approach of boreal winter, importers focus on energy efficiency and measures to cut costs and curb demand. More oil on the market may lower pump prices, reducing costs of production and transport. Removing or taming cost push factors for inflation can slow the inflationary spiral Cost-push inflation occurs when supply costs rise or supply levels fall. These scenarios will lift prices while demand remains the same but cold weather will boost demand for heating from September.

A possible downside to output rise is a collapse of prices if too much oil is produced. A fall in prices to below US$60 per barrel may add fiscal pressure for the Government but this may be temporary. Average costs at the pump declined recently after months of historic high gasoline prices across the United States, with 25 states now recording averages below $4 a gallon.

 

New Oil Power Guyana To Surpass U.S. Offshore By 2035

David Blackmon
Jul 28, 2022,

Guyana on planet Earth in space

As the Biden administration focuses on its efforts to end new leasing and drilling for oil and gas in the Gulf of Mexico and other U.S. offshore provinces, investment continues to pour into projects offshore petrostate Guyana. A new study by energy intelligence group Rystad Energy finds Guyanese oil production growing at such a rapid pace that it will surpass production levels in other big offshore basins, including the U.S., Norway and Mexico, by 2035 to become the world’s 4th-largest offshore producer.

Rystad reports that Guyana has been the global leader for new discoveries since 2015, with 11.2 billion barrels of oil equivalent, which amounts to 18% of total global discoveries and 32% of discovered oil. That growth has been driven by the prolific Stabroek block, where a consortium led by ExxonMobilXOM +4.6% has announced a series of major new discoveries since that time.

Coincidentally, the year 2015 was also when the global oil industry started to suffer from a chronic under-investment in the finding of new reserves ample enough to replace annual consumption. It’s an industry malady that still continues today, and has led to the current under-supplied market conditions. Exxon announced its initial Liza-1 discovery well in May of that year, and the number of new Guyana discoveries has now grown to 32, with two more announced this week.

The Guyana government is the main beneficiary from the net revenues of the production. Rystad notes that the government receives 59% of the total value from the Stabroek asset, comparing that to the roughly 40% the U.S. government would receive from a typical offshore production area under current law. Government revenues are scheduled to surpass $1 billion this year, and Rystad says they will average $3.6 billion per year through 2030, rising to $12.4 billion annually through 2040.

Rystad concludes Guyana’s offshore production is in prime position to weather the energy transition. Due to an estimated breakeven price of just $28 per barrel, Guyana is “well-positioned as an advantaged supply source in all Rystad Energy’s energy transition oil demand scenarios.” The report also states that “the emissions intensity of Guyanese production is only half the global average,” and those emissions are expected to decline further in the years to come, due in large part to the consortium’s usage of state-of-the-art FPSOs (floating production storage and offloading vessels).

The large volumes of associated natural gas produced at Stabroek come with further environmental benefits, and will soon enable the government to replace old electric power plants that use fuel oil with a new state-of-the-art natural gas plant. The government is also using some of the oil revenues to fund the installation of solar farms and a major new hydropower project. These projects will not only cut emissions from the power sector, but result in lower consumer costs as well.

While all this prolific growth is taking place offshore Guyana – and offshore the neighboring country of Suriname as well – the Biden administration continues its focus on ensuring no similar offshore oil and gas advancements take place in the United States. The Interior Department, led by Secretary Deb Haaland, has yet to conduct a single successful offshore lease sale over the last 18 months. Secretary Haaland did finally issue a draft 5-year federal offshore leasing plan on July 1 which contemplates holding a series of sales during that time frame, but emphasized her department would retain discretion to hold none if it so chooses.

 

How Real Estate Developers Are Adjusting To The Growing Number Of Eco-Friendly Homes In Hollywood

Forbes Business

Talk To The Hand: Upstream Industry Eyeing Returns More Than Rigs

The FTC’s Challenge To Meta’s Acquisition Of A VR Fitness Company Hurts Innovation And Competition
How Real Estate Developers AreAdjusting To The Growing Number Of Eco-Friendly Homes In Hollywood

Thus, it is no surprise that the billions of investment capital targeting new offshore oil and gas reserves is flowing out of the United States and into countries like Guyana. Over time, its 800,000 people seems destined to become a significant oil exporting power, surpassing the stagnating industry in a country with 330 million citizens.

It’s just a sign of the times.

It is worth noting that climate activists are driving the petroleum industry away in Europe and North America and continue to attack infrastructure and file lawsuits in Britain

T&T exports petrochemicals to Europe

Aug 28 2022

T&T has been exporting significant amounts of ammonia to Europe, amid natural gas curtailment by Russia, reducing petrochemical production on the continent. North American fertilizer producer Nutrien, T&T’s largest producer of ammonia, plans to sell cargoes into the European market and to Morocco.

Nutrien has sold two cargoes into NW Europe loading from Point Lisas in September. Trinidad is supplying four cargoes, totalling 112,500t, to OCP for delivery into Jorf Lasfar, Morocco, in early September.

Nutrien announced the sale of a 10,000t Trinidad cargo for delivery to northwest Europe at $1,290/t cfr duty free, $5/t higher than on 24 August.  The cargo will load in the second half of September from Point Lisas.

On August 19, Nutrien announced the sale of a spot ammonia cargo from Trinidad into northwest Europe within the price range of $1,225-1,275/t cfr duty free/paid.

The vessel is expected to load in early-September, and nets back to $1,170-1,180/t fob Trinidad.

European curtailments have meant even higher prices for ammonia which edged up last week by US $15 per metric tonne. European production costs have soared above the market price since mid-June, but as feedstock costs breached $3,000/t this week, several producers made the decision to bring production offline, with some planning to switch to imports and take advantage of steady global supply options for ammonia until the end of October.

“This supply optionality, particularly in the Americas and Middle East, is preventing a steep escalation in European delivered pricing for now. But the disconnect between the west and east of Suez markets is increasing. Buyers in east Asia are preparing for steep competition for fourth-quarter cargoes, but thin prompt demand is keeping prices flat.”

There is potential for some stability into September but sellers may slowly increase offers in order to prevent any downstream destruction. A supply crunch could therefore emerge from November when seasonal demand ramps up.

Yara is the latest ammonia producer to confirm it is implementing further curtailments. The planned shutdowns across its European fertilizer plants will be concentrated mostly at its Sluiskil and Tertre factories in the Netherlands and Belgium.  Yara has been ramping up ammonia shipments from its supply sources in Trinidad, the US and north Africa to cover its higher requirements.

Much of the gas price rally since 19 August was driven by Russian state-controlled Gazprom which announced that it will halt gas deliveries through the Nord Stream pipeline for a three-day maintenance period from August 31 to September 2.  This raised fears that flows will be suspended for longer.

But even if Nord Stream flows return to 20% of capacity as scheduled in early September, sustained low Russian gas flows and a growing crisis in the power sector points to an extremely tight gas supply-demand balance in Europe this winter.

Low availability in France’s nuclear power plant fleet, low hydropower reservoir levels and logistical issues hampering the transport of coal in Germany suggest a need for strong gas burn from the power sector.

No new purchases are reported out of Morocco, but the September line up has grown to 135,500t, the majority of which will be supplied from Trinidad, the leading source of ammonia for Morocco this calendar year.

Four cargoes, totalling 112,500t, are scheduled to arrive at Jorf Lasfar between 2-20 September from Trinidad and Tobago, with an additional 23,000t arriving from the US Gulf.

Trade in the southern US ramped up this week, pushing Midwest pricing higher while sparse demand kept CornBelt values unchanged week-to-week as crops continue to develop and farmers have yet to evaluate their needs for the fall application season.

In the US Gulf coast, Nola barge values remained at$995-1,000/st fob (freight on board) amid thin trade as producers export tons to Europe and North Africa, seeking to move the market towards a more balanced state as demand from downstream consumers lulls through the offseason.

Some market expectations remain for either a roll-over or small increase to the September Tampa contract, despite recent news of nitrogen fertilizer output curtailments across Europe as feedstock costs surge.

Participants also cite a lack of import demand from US buyers limiting gains to settlement, as well as increased competition with US producers for ammonia shipments to importers.

But fob pricing in the Caribbean suggests that there may an argument to negotiate the Tampa price towards the $1,200/t cfr level.

Panama/IMF

[Second Review Under the Arrangement Under the Precautionary and Liquidity Line-Press Release; Staff Report; and Statement by the Executive Director for Panama]

Publication Date:August 22, 2022

Electronic Access:Free Download.

Summary:Despite continuing challenges from the COVID-19 pandemic and new risks emanating from global uncertainties, a combination of sound policy measures and a resolute vaccination program have supported a gradual return to normality and underpin a rebound in economic activities.

External imbalances remain contained, and fiscal consolidation is underway as the authorities are adhering to the fiscal rule, which ensures a declining path for the public debt to GDP ratio.

While the outlook is favorable, it remains subject to elevated risks, including global uncertainties arising from the war in Ukraine, faster-than-expected US monetary tightening, tighter global financial conditions, higher crude oil prices, and new variants of the COVID-19 virus that may derail the recovery. Domestic risks include significant delays in implementing the FATF action plan to exit the grey list.Series:Country

Report No. 2022/276

Subject:International organization Monetary policy

Frequency:regular
ENGLISH
Publication Date:August 22, 2022

API statement on Inflation Reduction Act

Aug. 8, 2022

API says the bill ‘falls short in addressing America’s energy needs.’

WASHINGTON, DC – American Petroleum Institute (API) President and CEO Mike Sommers issued the following statement on the Inflation Reduction Act:

“This package falls short in addressing America’s energy needs. While we’re encouraged that the bill will likely open the door to more federal onshore and offshore lease sales and will expand and extend tax credits for carbon capture, we remain opposed to policies that raise taxes and discourage investment in US oil and natural gas.”

“Glaringly absent in the bill is permitting reform, which is required for America’s infrastructure needs and to bolster critical oil, natural gas and renewable supplies to meet our current and future energy demand. We urge Congress to take up and pass permitting reform without delay.”

 

API policy plan to restore energy leadership, fuel economic recovery

Craig Fleming, Technical Editor, World Oil

6/14/2022, WASHINGTON D.C.

The American Petroleum Institute released a “10 in 2022 plan”—10 policies that policymakers can advance today to unlock American energy, fuel economic recovery and strengthen national security.

As energy costs and geopolitical instability around the world continue to rise, API is calling on policymakers to confront the global mismatch between energy demand and available supply that has driven higher fuel prices by supporting greater U.S. production and infrastructure.

“America is blessed with abundant energy resources that are the envy of the world,” said API President and CEO Mike Sommers. “Given today’s global unrest and economic uncertainty, American energy is a long-term strategic asset that can advance our national and economic security. “These ‘10 in 2022’ policies are a framework for new energy leadership for our nation, unleashing investment in America and creating new energy access while avoiding harmful government policies and duplicative regulation. It’s time to lead.”

In a letter to President Biden, Sommers highlighted the economic importance of American oil and natural gas resources, supporting more than 11 million U.S. jobs, investing billions in the U.S. economy, and powering “our way of life.” He urged the administration to act immediately to implement the 10 policies that support energy investment, create new access and keep government policies from unnecessarily restricting energy growth.

Here are the 10 actions that policymakers can take right now:

1. Lift development restrictions on federal lands and waters. The Department of the Interior (DOI) should swiftly issue a 5-year program for the Outer Continental Shelf and hold mandated, quarterly, onshore lease sales with equitable terms. DOI should reinstate canceled sales and valid leases on federal lands and waters.
2. Designate critical energy infrastructure projects. Congress should authorize critical energy infrastructure projects to support the production, processing and delivery of energy. These projects would be of such concern to the national interest that they would be entitled to undergo a streamlined review and permitting process not to exceed one year.
3. Fix the NEPA permitting process. The Biden administration should revise the National Environmental Policy Act (NEPA) process by establishing agency uniformity in reviews, limiting reviews to two years, and reducing bureaucratic burdens placed on project proponents in terms of size and scope of application submissions.
4. Accelerate LNG exports and approve pending LNG applications. Congress should amend the Natural Gas Act to streamline the Department of Energy (DOE) to a single approval process for all U.S. liquefied natural gas (LNG) projects. DOE should approve pending LNG applications to enable the U.S. to deliver reliable energy to our allies abroad.
5. Unlock investment and access to capital. The Securities and Exchange Commission should reconsider its overly burdensome and ineffective climate disclosure proposal. The Biden administration should ensure open capital markets, where access is based upon individual company merit free from artificial constraints, based on government-preferred investment allocations.
6. Dismantle supply chain bottlenecks. President Biden should rescind steel tariffs that remain on imports from U.S. allies, as steel is a critical component of energy production, transportation, and refining. The Biden administration should accelerate efforts to relieve port congestion, so that equipment necessary for energy development can be delivered and installed.
7. Advance lower-carbon energy tax provisions. Congress should expand and extend Section 45Q tax credits for carbon capture, utilization, and storage development and create a new tax credit for hydrogen produced from all sources.
8. Protect competition in the use of refining technologies. The Biden administration should ensure that future federal agency rulemakings continue to allow U.S. refineries to use the existing critical process technologies to produce the fuels needed for global energy markets.
9. End permitting obstruction on natural gas projects. The Federal Energy Regulatory Commission should cease efforts to overstep its permitting authority under the Natural Gas Act and should adhere to traditional considerations of public needs, as well as focus on direct impacts arising from the construction and operation of natural gas projects.
10. Advance the energy workforce of the future. Congress and the Biden administration should support the training and education of a diverse workforce through increased funding of work-based learning and advancement of STEM programs to nurture the skills necessary to construct and operate oil, natural gas and other energy infrastructure.

“While members of your administration have recently discussed the need for additional supplies to solve the energy crisis, your administration has restricted oil and natural gas development, canceled energy infrastructure projects, imposed regulatory uncertainty and proposed new tax increases on American oil and gas producers competing globally. Respectfully, the American people need a different direction to solve this crisis. API’s ‘10 in 2022 Plan’ outlined above offers this new direction,” emphasized Sommers. “The plan has the potential to lead to an era of collaboration between the government and the private sector to meet our growing energy needs and to provide a measure of relief for the American people. We request the opportunity to work with your administration to help maintain the United States’ essential leadership position in the world.”

 

 

Climate bill’s unlikely beneficiary: US oil and gas industry

By MATTHEW BROWN and MICHAEL PHILLIS
August 19, 2022

BILLINGS, Mont. (AP) — The U.S. oil industry hit a legal roadblock in January when a judge struck down a $192 million oil and natural gas lease sale in the Gulf of Mexico over future global warming emissions from burning the fuels. It came at a pivotal time for Chevron, Exxon and other industry players: the Biden administration had curtailed opportunities for new offshore drilling, while raising climate change concerns.

The industry’s setback was short-lived, however. The climate measure President Joe Biden signed Tuesday bypasses the administration’s concerns about emissions and guarantees new drilling opportunities in the Gulf of Mexico and Alaska. The legislation was crafted to secure backing from a top recipient of oil and gas donations, Democratic Sen. Joe Manchin, and was shaped in part by industry lobbyists.

While the Inflation Reduction Act concentrates on clean energy incentives that could drastically reduce overall U.S. emissions, it also buoys oil and gas interests by mandating leasing of vast areas of public lands and off the nation’s coasts. And it locks renewables and fossil fuels together: If the Biden administration wants solar and wind on public lands, it must offer new oil and gas leases first.

As a result, U.S. oil and gas production and emissions from burning fuels could keep growing, according to some industry analysts and climate experts. With domestic demand sliding, that means more fossil fuels exported to growing foreign markets, including from the Gulf where pollution from oil and gas activity plagues many poor and minority communities.

To the industry, the new law signals Democrats are willing to work with them and to abandon the notion fossil fuels could soon be rendered obsolete, said Andrew Gillick with Enverus, an energy analytics company whose data is used by industry and government agencies.

“The folks that think oil and gas will be gone in 10 years may not be thinking through what this means,” Gillick said. “Both supply and demand will increase over the next decade.”

The result would be more planet-warming carbon dioxide — up to 110 million tons (100 million metric tons) annually — from U.S.-produced oil and gas by 2030, with most coming from fuel burned after export, according to some economists and analysts.  A Department of Energy analysis obtained by The Associated Press Thursday said the law’s leasing provisions “may lead to some increase” in carbon pollution, but that other provisions would cut 35 tons of greenhouse gas for every new ton of fossil fuel pollution.

The law reinstates within 30 days the 2,700-square miles (6,950-square kilometers) of Gulf  leases that had been withheld. It ensures companies like Chevron will have the chance to expand and overrides the concerns of U.S. District Judge Rudolph Contreras that the government was “barreling full-steam ahead” without adequately considering global emission increases.

The measure’s importance was underscored by Chevron executives during a recent earnings call, where they predicted continued growth in the Gulf and tied that directly to being able “to lease and acquire additional acreage.”

The fossil fuel industry’s ambitions are now directly linked to wind and solar development: The bill prohibits leasing of federal lands and waters for renewable energy unless the government has offered at least 2 million acres (810,000 hectares) of public land and 60 million acres (24 million hectares) in federal waters for oil and gas leasing during the prior year. The law does not require leases to be sold, only offered for sale.

The measure’s critics say that’s holding renewables hostage unless the fossil fuel industry gets its way. Some accuse Biden and Democrats of abandoning pledges to confront the industry.

“It’s 10 more years of mandatory leases,” said Brett Hartl with the Center for Biological Diversity. “We will do our damnedest but it’s hard to fight them all.”

Communities near polluting industrial plants will continue to suffer if the oil and gas industry remains vibrant, said Beverly Wright, executive director of the Deep South Center for Environmental Justice and a member of the White House Environmental Justice Advisory Council. She worries that incentives in the law for technology that captures carbon from industrial processes could also perpetuate harm to these poor, mostly minority residents.

In Louisiana’s St. James Parish, where petrochemical plants dominate the landscape, environmental justice activist Sharon Lavigne said the legislation will allow pollution from fossil fuels to keep harming her community.

“That’s just like saying they’re going to continue to poison us, going to continue to cause us cancer,” said Lavigne, a former high school teacher who founded the group Rising St. James.

The leasing provisions mark a failure in efforts by environmentalists and social justice advocates to impose a nationwide leasing ban. The movement’s high point came when Biden followed campaign pledges to end new drilling on federal lands with an order his first week in office suspending lease sales.

U.S. District Judge Terry Doughty in Lake Charles, Louisiana blocked Biden’s order nationwide last year. A federal appeals court Wednesday struck down Doughty’s ruling, then Thursday he issued a new injunction saying lease sales can’t be stopped in the 13 states that opposed Biden’s policy.

A stream of potential drilling sites is crucial for companies to maintain future production because wells can take years to develop and some yield nothing, said Jim Noe, an industry lobbyist who worked with Senate staff on the climate bill’s leasing provisions.

“The industry is in constant need — almost like a treadmill — of lease sales,” said Noe, an attorney at Holland & Knight who represented offshore oil and gas companies. Noe said demand for oil and gas won’t decline immediately and Gulf drilling brings jobs and more energy security.

A United Nations report before Biden took office warned that the U.S. and other nations need to sharply decrease investments in oil, gas and coal to keep temperatures from rising more than 1.5 degrees Celsius (2.7 degrees Fahrenheit) since pre-industrial times.

Other bill provisions that focus on renewable energy and capturing carbon dioxide from industrial plants would result in net emission reductions 10 to 50 times greater than emission increases from burning more oil and gas, analysts say.

The increase in oil and gas emissions still could be substantial — as much as 77 million to 110 million tons (70 to 100 million metric tons) of additional carbon dioxide annually by 2030 from new leasing, according to economist Brian Prest with the research group Resources for the Future.

Other experts had lower projections: The San Francisco-based climate research group Energy Innovation predicted up to 55 million tons (50 million metric tons) of additional carbon dioxide annually from new leasing. Researchers from Princeton and Dartmouth said the impact could be negligible or as much as 22 million tons (20 million metric tons) in the U.S., plus much more abroad.

Any increase hinges on global oil and natural gas prices staying high — and that in turn depends on a range of factors including the ongoing war in Ukraine, said Robbie Orvis with Energy Innovation.

“It may increase oil and gas production somewhat, but that is very much offset by all of the other pieces of the bill,” Orvis said.

Yet there’s uncertainty about how quickly other pieces of the bill could bring emission cuts. Wind and solar construction could run into the supply chain problems hindering many economic sectors. And technology to capture and store carbon dioxide is still being refined and is in limited use.

Other provisions could make it potentially more expensive to drill on public lands and waters. There are modest increases in royalty and rental rates and a new $5-per-acre fee when companies want particular parcels offered for lease. Another fee would require companies to pay for natural gas, or methane, that enters the atmosphere as a potent greenhouse gas.

The higher costs could dampen interest among companies, said Mark Squillace, a natural resources law professor at University of Colorado Law School.

“Even though the industry is going to be getting more oil and gas leasing if they want it, it’s an interesting question: Do they want it?” Squillace asked.

___

Phillis reported from St. Louis.

Seth Borenstein contributed from Kensington, Maryland.

___

___

[The Associated Press receives support from the Walton Family Foundation for coverage of water and environmental policy. The AP is solely responsible for all content.]

 

 

India becoming a developed country at 75

Rhea Mogul, CNN August 15, 2022

Standing in front of the historic Red Fort in Delhi, Prime Minister Narendra Modi pledged to transform India into a developed country in the next 25 years.

“The way the world is seeing India is changing. There is hope from India and the reason is the skills of 1.3 billion Indians.The diversity of India is our strength. Being the mother of democracy gives India the inherent power to scale new heights.”

Modi’s words came as millions celebrated 75 years of Indian independence since the stroke of midnight on August 15, 1947 that ended nearly 200 years of British imperial rule. First Prime Minister Jawaharlal Nehru said the country was on a path of revival and renaissance.

“A moment comes, which comes but rarely in history, when we step out from the old to the new. When an age ends, and when the soul of a nation, long suppressed, finds utterance.“

Seventy-five years later, the India of today is almost unrecognizable from that of Nehru’s time. Since gaining independence, India has built one of the world’s fastest growing economies, is home to some of the world’s richest people, and according to the United Nations, its population will soon surpass China’s as the world’s largest.

Despite the nation’s surging wealth, poverty remains a daily reality for millions of Indians and significant challenges remain for a diverse and growing nation of disparate regions, languages, and faiths.

Rise of an economic power
Following independence, India was . reeling from partition and synonymous with poverty. GDP was $20 billion. Fast forward three-quarters of a century and India’s nearly $3 trillion economy is now the world’s fifth largest and among its fastest growing. The World Bank promoted India from low-income to middle-income status — a bracket that denotes a gross national income per capita of between $1,036 and $12,535.

Literacy rates have increased to 74% for men and 65% for women and average life expectancy is now 70 years. The Indian diaspora spread far and wide, studying at international universities and occupying senior roles in the world’s biggest tech companies, including Google chief executive Sundar Pichai, Microsoft CEO Satya Nadella and Twitter boss Parag Agrawal.

Much of this transformation was prompted by the “pathbreaking reforms” of the 1990s, when then Prime Minister PV Narasimha Rao and his Finance Minister Manmohan Singh opened the country to foreign investment after an acute debt crisis and soaring inflation forced a rethink of socialist Nehru’s model of protectionism and state intervention.
The reforms helped turbocharge investment from American, Japanese and Southeast Asian firms in major cities including Mumbai, the financial capital, Chennai and Hyderabad. The result is that today, the southern city of Bengaluru — dubbed “India’s Silicon Valley” — is one of the region’s biggest tech hubs.

India has seen a proliferation of billionaires to over100, up from just nine at the turn of the millennium. Among them are infrastructure tycoon Gautam Adani, whose net worth is more than $130 billion, according to Forbes, and Mukesh Ambani, founder of Reliance Industries, worth about $95 billion.

The rise of such ultra-wealth highlights how inequality remains even long after the end of colonialism — with the country’s richest 10% controlling 80% of the nation’s wealth in 2017, according to Oxfam. On the streets, that translates into a harsh reality, where slums line pavements beneath high-rise buildings.

Rohan Venkat, a consultant with Indian think tank Centre for Policy Research, says India’s broader economic gains as an independent nation shows how it has confounded the skeptics of 75 years ago.

“In a broad sense, the image of India (post independence) was that it was an exceedingly poor place.
“Certainly the image of India (to the West) was heavily overlaid by Orientalist tropes — your snake charmers, little villages. Some of these were not entirely off the mark … but a lot of it was simple stereotyping.
Since then, India’s trajectory has been “exceptional,” Venkat said.

“To witness the largest transfer (of power) from an elite ruling the state, to now becoming a complete universal franchise … we are looking at an incredible political and democratic experiment that is unique.”

Rise of a geopolitical giant
For years after independence, India’s international relations were defined by its policy of non-alignment, the Cold War era stance favored by Nehru that avoided siding with either the United States or the Soviet Union.

Nehru played a leading role in the movement, which he saw as a way for developing countries to avoid being dragged into a conflict they had little interest in. That stance did not prove popular with Washington, preventing closer ties and marring Nehru’s debut trip to the US in October 1949 to meet President Harry S. Truman.

During the 1960s the relationship became further strained as India accepted assistance from the Soviets and this frostiness remained until 2000, when President Bill Clinton’s visit to India prompted a reconciliation.

Today, while India remains technically non-aligned, Washington’s need to balance the rise of China has led it to court New Delhi as a key partner in the increasingly active security grouping known as the Quad.
The grouping, which includes Japan and Australia, is widely perceived as a way of countering China’s growing military and economic might and its increasingly aggressive territorial claims in the Asia Pacific.

India has its own reasons for wanting to counterbalance Chinese influence, not least among them its disputed Himalayan border, where over 20 Indian troops were killed in a bloody battle with Chinese counterparts in June 2020. In October, the US and India will hold a joint military exercise less than 100 kilometers (62 miles) from that disputed border.

As Happymon Jacob, an associate professor of diplomacy and disarmament at the Jawaharlal Nehru University in New Delhi, put it: “India has been able to assert itself on the world stage because of the nature of international politics today and the political and diplomatic military capital that has been put in place by previous governments.”

Part of India’s growing geopolitical clout is due to its growing military expenditure, which New Delhi has ramped up to counter perceived threats from both China and its nuclear-armed neighbor, Pakistan.

Following their separation in 1947, relations between India and Pakistan have been in a near constant state of agitation, leading to several wars, involving thousands of casualties and numerous skirmishes across the Line of Control in the contested Kashmir region. In 1947, India’s net defense expenditure was just 927 million rupees — about $12 million in today’s money.

By 2021, its military expenditure was $76.6 billion, according to a report from the Stockholm International Peace Research Institute — making it the third highest military spender globally, behind only China and the US.
Ambitions on the world stage

Outside economics and geopolitics, India’s growing wealth is feeding its ambitions in fields as diverse as sport, culture and space.

In 2017, the country broke a world record when it launched 104 satellites in one mission, while in 2019, Prime Minister Modi announced that India had shot down one of its own satellites in a military show of force, making it one of only four countries to have achieved that feat.

Later that year, the country attempted to land a spacecraft on the moon. Though the historic attempt failed, it was widely seen as a statement of intent.
Last year, the country spent almost $2 billion on its space program,trailing the biggest spenders, the US and China, by some margin, but India’s ambitions in space are growing. In 2023, India is expected to launch its first manned space mission.

The country is using its growing wealth to boost its sporting prospects, spending $297.7 million in 2019 before the spread of Covid-19.

The Indian Premier League — the country’s flagship cricket tournament launched in 2007 — has become the second most valuable sports league in the world in terms of per-match value, according to Jay Shah, secretary of the Board of Control for Cricket in India, after selling its media rights for $6.2 billion in June.

Bollywood, India’s glittering multibillion dollar film industry, continues to pull in fans worldwide, catapulting local names into global superstars attracting millions of followers on social media. Between them, actresses Priyanka Chopra and Deepika Padukone have almost 150 million followers on Instagram.

“India is a strong country. It’s an aggressive player,” said Shruti Kapilla, professor of Indian history and global political thought at Cambridge University.   “In the last couple of decades, things have shifted. Indian culture has become a major story.”

Challenges and the future

For all of India’s successes, challenges remain as Modi seeks to “break the vicious circle of poverty.”  Despite India’s large and growing GDP, it remains a “deeply poor” country on some measures and that, consultant Venkat said, is a “tremendous concern.”

In 2017, about 60% of India’s nearly 1.3 billion people were living on less than $3.10 a day, according to the World Bank, and women still face widespread discrimination in the deeply parochial country.

“Many of India’s fundamental challenges remain what they were at the time of independence in some ways, at different parameters and scale,” Venkat said.

India is also on the front line of the climate crisis.
Recent heat waves — such as in April when average maximum temperatures in parts of the country soared to record levels and New Delhi saw seven consecutive days over 40 degrees Celsius (104 Fahrenheit) — have tested the limit of human survivability, experts say.
The poorest people are set to suffer the most, as they work outside in oppressive heat, with limited access to cooling technologies that health experts say is needed to contend with rising temperatures.
As the heat rises on the land, political pressure has grown with fears that the secular fabric of the country and its democracy are being eroded under the leadership of Modi, whom critics accuse of fueling a Hindu nationalism that has left many of the country’s 200 million Muslims living in fear.
Many states run by his ruling Bharatiya Janata Party (BJP) have introduced legislation critics say is deeply rooted in Hindutva ideology, which seeks to transform India into the land of the Hindus. There has been an alarming rise in support for extremist Hindu groups.
Arrests of numerous journalists have led to concerns the BJP is using colonial-era laws to quash criticism. In 2022, India slipped to number 150 on the Press Freedom Index published by Reporters Without Borders — its lowest position ever.

“The challenges now are about India’s nature of democracy,” Kapilla said. “India is going through a major, contentious change at the fundamental political level.”
Seventy-five years on, Nehru’s observation that “freedom and power bring responsibility” continue to ring true.

India’s first 75 years ensured its survival, but in the next 75 years it needs to navigate immense challenges to become a truly global leader, and not just in terms of population, said Venkat, from the Centre for Policy Research.

“Although (India) may end up being the world’s fastest growing major country over the next few years, it will still be miles behind its neighbor in China, or getting close to what it had hoped to achieve at this point, which was double digit growth. So the challenges are immediate and all over the place, chief among them being how to ensure its prosperity,” Venkat said.