U.S. Refiners Scramble as Venezuela Sanctions Eyed
U.S. refiners are bidding up prices for scarce types of crude oil needed for their most sophisticated plants as the United States reconsiders harsher sanctions on Venezuela that could further reduce imports of the country’s oil. Trump administration officials in recent days met with U.S. oil company executives to lay out potential actions in response to the Jan. 10 inauguration of Venezuelan President Nicolas Maduro in an election it considered illegitimate. Among other steps, U.S. officials have recognized the opposition-run Venezuelan congress as the only legitimately elected authority. But the proposals that would most affect the energy industry involve banning U.S. exports of refined products or limiting oil imports - a move that, until now, the White House has not taken even after sanctioning individuals and barring access to U.S. banks. “It’s more serious than I’ve heard before,” said a refining industry executive familiar with the White House discussions. “They are setting the table to pull the trigger if they have to.” U.S. refiners have few supply alternatives if the Trump administration were to cut off crude imports from that country. Supplies of the heavy oils preferred by Gulf Coast refiners have been harder to secure in recent months because of cutbacks and production curbs in Western Canada, Mexico and Venezuela. U.S. oil companies that depend on Venezuelan oil have opposed past proposals that would halt imports and did so again this week, said several people close to the talks. Two big refiners, Phillips 66 and PBF Energy, cut their dependence on the South American country last year, according to U.S. Energy Information Administration data.
Germany Should Stick to Nord Stream 2
Germany should finish the Russian-backed Nord Stream 2 gas pipeline despite U.S. opposition and growing domestic concerns, but future energy projects should be coordinated by the European Union, a veteran German diplomat said.Wolfgang Ischinger, chairman of the Munich Security Conference, said the initial “birth defect” of the $11 billion project was the fact that European treaties had allowed the German government to deem the project as purely commercial. In fact, he told reporters, it was clear that such a large project clearly had a political nature, particularly given Russia’s annexation of the Crimea region of Ukraine in 2014 and other actions in recent years. The pipeline, which would carry gas straight to Germany under the Baltic Sea, has been criticized in some quarters because it would deprive Ukraine of lucrative gas transit fees, potentially making Kiev more vulnerable in the future.Germany and Russia have been at odds since Moscow annexed Crimea, but both countries have a common interest in the pipeline, which will double capacity of the current route.Russian gas giant Gazprom is building the project jointly with Western partners Uniper, Wintershall , Engie, OMV and Shell.Ischinger cautioned against abandoning the project as it neared its completion date of late 2019, citing German foreign policy’s focus on consistency and sustainability. “Saying ‘forget it’ now would not be good German foreign policy.”
Driftwood LNG Gets Final Environmental Nod
Tellurian Inc’s proposed Driftwood liquefied natural gas (LNG) project in Louisiana took a major step forward as the U.S. federal energy regulator issued a final environmental report clearing the way for the company to seek a permit to build the export terminal. The company said it now needs an instruction from the Federal Energy Regulatory Commission (FERC) allowing the construction and operation of the 27.6 million tonne per annum (mtpa) liquefaction plant aimed at meeting growing global demand for the supercooled fuel. “Tellurian will then stand ready to make a final investment decision and begin construction in the first half of 2019, with the first LNG expected in 2023,” said Tellurian Chief Executive Meg Gentle in a statement
Schlumberger to Manage Brazil Offshore Rig
Schlumberger signed a contract worth over $200 million with oil major Equinor to manage an offshore rig as part of a drilling program in Brazil’s offshore Campos oil basin, a person familiar with the matter said. The deal would be the first time an oil services company replaces a drilling-rig contractor, the person said, adding pressure to offshore drillers still reeling from an industry-wide contraction. “Schlumberger will provide the full scope of well construction services, drilling management services, and advanced digital technology solutions,” according to a company document seen by Reuters ahead of its scheduled publication. A Schlumberger spokeswoman declined to comment. Equinor did not immediately respond to a request for comment.
Germany Gas Imports Down Month-on-Month
Germany imported 9 percent less natural gas in November 2018 than the same month in 2017 but imports for the first 11 months to November were still 9 percent higher than the same period a year earlier, official data showed. The volume of imports from January to November 2018 was 3.99 million Terajoules (TJ) or 113 billion cubic metres (bcm), according to trade statistics office BAFA, which releases data with a time lag. German importers paid 21.2 billion euros ($24.1 billion) for gas in the year to November, up 23.3 percent on a year earlier and mirroring the rise in oil prices. Traders of gas, power and carbon watch winter gas imports as possible imbalances in supply and demand can drive up prices and volumes in all three markets
Petrobras to Restart Stake Sales for TAG Pipeline
Petroleo Brasileiro SA (Petrobras) will reopen the bidding process for stakes in its Transportadora Associada de Gas (TAG) pipeline unit and Araucaria fertilizer factory, Brazil’s state-controlled oil company said. Petrobras, as the company is known, will also renew efforts to look for partnerships in refining, it said in a securities filing. The oil company had been targeting a sale of a 90 percent stake in TAG, which operates about 4,500 kilometers (2,800 miles) of gas pipelines. The pipeline operator is the largest divestiture in Petrobras’ asset sales program. Prior to the TAG sale being blocked in court, France’s Engie SA had been in talks to purchase the pipeline business and had submitted the highest bid, worth more than $7 billion.