Japan pushes abatement approach to energy transition
Japan is keen to promote its energy transition approach, focused on carbon abatement technologies, to the wider coal-reliant Asia-Pacific region.
The country has accelerated development of carbon abatement technologies to keep fossil fuels in its energy mix and boost energy security and economic growth. Japan, with its G7 counterparts, pledged to phase out "unabated" coal-fired plants by 2035, or "in a timeline consistent with keeping a limit of a 1.5°C temperature rise within reach, in line with countries' net zero pathways".
This is a major step for Japan, a resource-poor country. But legislative progress aimed at developing value chains for carbon capture and storage (CCS) and cleaner fuels, such as hydrogen and ammonia, might have encouraged Tokyo to commit, especially since the G7 text allows for some wiggle room.To ensure continued use of its abated thermal power plants, trade and industry ministry has requested ¥11.2bn ($79mn) to support CCS projects, including exploration of CO2 storage sites, for 2025-26, up sharply from the ¥1.2bn budgeted for 2024-25.
Japan has yet to set a date to achieve the phase-out target. But it had already promised not to build new unabated coal-fired plants at last year's UN Cop 28 climate talks, while pledging to phase out "inefficient" coal-fired plants by 2030. Less than 5pc of Japan's operational coal fleet has a planned retirement year, according to analysis by Global Energy Monitor, and these might comprise the oldest and least efficient plants. Coal capacity built in the last decade, following the Fukushima-Daiichi nuclear disaster, is unlikely to receive a retirement date without a countrywide policy that calls for a coal exit.
Japan's coal demand could decline, to some extent, under global divestment pressure. But the fuel remains key, as the government sees renewables and nuclear as insufficient to meet rising power demand driven by the growth of data centres needed to enable artificial intelligence.
Continental divide
The country is keen to extend its vision for "various" and "practical" pathways, including abatement technologies, to coal-reliant southeast Asia. This stems from Tokyo's sceptical view about promoting a more European approach to the energy transition — driven by wind and solar power — to Asian countries. Japan stresses the importance of more diversified pathways, including thermal power with abatement. The country aims to spur decarbonisation in Asia-Pacific through a platform called the Asia Zero Emission Community (Azec) initiated in 2022. Asia-Pacific accounts for more than half of global greenhouse gas (GHG) emissions, at 17.178bn t of CO2 equivalent, according to the IEA.
In Jakarta last month, 11 Azec countries emphasised the need to co-operate "to decarbonise coal power generation". The platform sets out options such as biogas, hydrogen and ammonia, and retrofitting with CCS and carbon capture, utilisation and storage. Japan's industries have already committed to carbon abatement at coal-fired plants in Asia, leveraging their technological know-how.
Tokyo has pledged to provide about $70bn to support decarbonisation globally. This funding is part of wider financial assistance to help mobilise the estimated $28 trillion that Asia requires. To secure the funding, Japan has already issued part of a $139bn climate transition bond and aims to strengthen the financial support through the Asia Zero Emission Centre, the latest Azec initiative, under which transitional finance will be studied further, a trade and industry ministry official told Argus.
Japan is on track to reduce its GHG emissions by 46pc by the April 2030-March 2031 fiscal year from its 2013-14 level, and hit its net zero emissions goal by 2050.
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US Gulf oil shut-ins drop as Helene nears landfall
US Gulf oil shut-ins drop as Helene nears landfall
New York, 26 September (Argus) — US Gulf of Mexico oil production shut-in levels fell today as Hurricane Helene bore down on Florida's west coast as a category 3 storm, bringing the threat of dangerous storm surge and winds. Around 441,923 b/d of US offshore oil output, or 25pc, was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE). That is down from 29pc on Wednesday as the eastern Gulf path of the storm took it farther away from most offshore production facilities. About 363.39mn cf/d of natural gas production, or 20pc of the region's output, was also off line today, up from 17pc on Wednesday. Operators have evacuated workers from 27 offshore platforms. Helene was last about 145 miles west-southwest of Tampa, Florida, packing maximum winds of 120mph, according to a 4pm ET advisory from the US National Hurricane Center. Further intensification is likely and Helene could approach the coast at category 4 strength, with winds of at least 130mph. Landfall is expected near Port Leon on Apalachee Bay Thursday evening before Helene is forecast to turn northwestward and slow down over the Tennessee Valley on Friday and into the weekend. Earlier this week, offshore operators including BP, Equinor and Chevron took the precaution of suspending some operations and evacuating workers from offshore facilities in advance of the hurricane. Some facilities have since started back up as the hurricane's track shifted away from the main oil and gas hub in the region. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil's drought: Northern rivers still dropping
Brazil's drought: Northern rivers still dropping
Sao Paulo, 26 September (Argus) — The worst drought in Brazil's history continues to reduce river levels in the Northern Arc region, hampering navigation on rivers that are used as waterways and are important routes to transport grains and fertilizers. Madeira waterway The waterway links Rondonia state's capital Porto Velho to the Itacoatiara port, in Amazonas state. Itacoatiara port is expected to receive around 371,435 metric tonnes (t) of fertilizers in September, according to line up data from shipping agency Unimar. Status: The situation is most critical in the Madeira waterway, the second largest in the northern region, in Porto Velho. The state's ports and waterways authority (Soph) halted operations there on 23 September because the Madeira River's depth at the port reached 25cm (9.8in), the lowest since monitoring began in 1967. The Madeira River depth in Porto Velho increased to 34cm on 26 September, according to monitoring data from the Brazilian Geological Survey (SGB). Amazonas waterway It is the main waterway in Brazil's north, handling around 65pc of the region's cargo, according to the national transportation and infrastructure department (Dnit). It links Amazonas' capital Manaus to Para's capital Belem. Status: The Negro River has also been falling. The depth was at almost 13.88m at the SGB monitoring point in Manaus on 26 September — an extreme drought level and very close to the historic low of 13.64m recorded in 2023. Tapajos waterway It is an important waterway to move production from Mato Grosso state's northern area, with the Santarem port, in Para state, as a destination. The Santarem port handled nearly 4mn t of cargo in 2023, with fertilizers accounting for 578,630t, according to the Para port authority. Status: The Tapajos-Teles Pires waterway is also facing a dire situation. The national water and sanitation agency ANA declared a water shortage on the Tapajos River on 23 September. Drier weather than usual has dropped the levels of Tapajos, especially in the stretch between Itaituba and Santarem cities, in Para state, where flows are below the minimum levels observed in history. The depth of the Tapajos River at the Itaituba monitoring point, where the transfer point for the Miritituba waterway is located, was at 92cm on 26 September, below the record low of 132cm, according to SBG data. At the Santarem monitoring point, where the port of Santarem is located, the Tapajos River was at 74cm, a level considered dry. The historical minimum at the location is -55cm below the port's reference point. A level below zero does not mean the river is dry, but a negative reading indicates very low conditions. Tocantins-Araguaia waterway The Tocantins-Araguaia waterway encompasses the Araguaia and Tocantins rivers. It runs from the Barra do Garcas city, in Mato Grosso, onto the Araguaia River, or from Peixes city, in Tocantins state, onto the Tocantins River, to the port of Vila do Conde, in Para. Soybeans, corn, fertilizers, fuels, mineral oils and derivative products are transported via the northern waterways. Vila do Conde port handled 19.3mn t of cargo in 2023, according to Para port authority. Status: The SGB has two monitoring points on the Araguaia River. In the Nova Crixas city, in Goias state, the river was at 299cm, below the historical level of 310cm. In Sao Felix do Araguaia city, in Mato Grosso state, the river was at 257cm, a situation of extreme drought and close to the historical minimum level of 251cm. In September, the federal government announced investments of R500mn ($91.4mn) to carry out dredging work on stretches of rivers in Amazonas. Para's state government requested another R146mn to address problems caused by the drought. By João Petrini Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Opec+, Saudis have no target oil price: sources
Opec+, Saudis have no target oil price: sources
Dubai, 26 September (Argus) — Neither Saudi Arabia nor the wider Opec+ group have any specific target for oil prices, and no member of the producers' alliance is about to abandon output discipline in favour of chasing market share, multiple Opec+ sources have told Argus . Oil prices fell earlier on Thursday following unconfirmed press reports that Saudi Arabia may be willing to tolerate lower oil prices as part of a plan to increase crude output to regain market share. Sources within Opec+ have since dismissed those assertions outright, insisting that the basis for the group's collective decision-making will always be market fundamentals, and in particular the five-year average of crude inventories, rather than targeting any particular oil price. "Neither Opec+, Opec nor the Saudis have any price target, let alone $100/bl," one source said, in response to a Financial Times report that stated Saudi Arabia is ready to "abandon its unofficial price target of $100/bl". A second source said the $100/bl figure being reported is not a target but is more likely to refer to a recent estimate issued by banks and other financial institutions of Saudi Arabia's "so-called break-even oil price" — that is, the price the kingdom needs to cover its spending plans. In April, the IMF estimated Saudi Arabia's breakeven oil price at $96.20 for 2024, almost 20pc above the previous year and around a third higher than current Ice Brent futures. "The breakeven is, at best, indicative, but does not tell the full story," the source said. Focusing on it "is totally devoid of the idea that a government has a host of other tools to manage an economy — issuing bonds, borrowing, adjusting one's budget". Eight Opec+ producers, led by Saudi Arabia and Russia, were due to begin a phased return of around 2.2mn b/d of "voluntary" output cuts from the start of next month. But mounting concerns over the strength of the global economy, and in turn oil demand, prompted the group to defer the plan by two months to December. With worries around oil demand not going away, and the market looking likely to flip into a surplus from the start of next year, some observers are questioning whether there will be any need for an increase in Opec+ supply from December. And if the eight members go ahead with unwinding the cuts regardless, whether that would signal a shift in the group's focus to chasing market share. But a third source rejected that view, as the group would "only be reversing what we have cut". "As a group, we have said time and time again that these cuts were both voluntary and temporary, and always stressed that they could be paused or reversed," the source said. "And earlier this month, that's exactly what we did with the two-month deferral to December." December or bust? The rationale to delay the increase in production to December was twofold, according to Opec+ sources. It not only reflected the uncertainty around the global economy, the US and Chinese economies, interest rates and demand. But more importantly, the decision was made to allow Opec+ members that have overproduced this year ꟷ namely Iraq, Kazakhstan and Russia ꟷ more time to show they are serious about compensating for exceeding their output targets. "There is so much uncertainty today which we, as Opec+, have no control over," one of the sources said. "But what we do control is our own affairs." Iraq and Kazakhstan have been under intense pressure in recent months to not only adhere to their pledged targets, but also compensate for past overproduction. While Kazakhstan did manage to produce below its target in August, Iraq continued to struggle. All eyes will be on how these countries do in September. "The overproduction is impacting our credibility, and we need to tackle that. Discipline is paramount," the source said. Reports that Saudi Arabia is committed to start unwinding cuts from December, come what may, are wide of the mark for several reasons, another source said. "First, this is not a decision for Saudi Arabia to make. It is for all eight to decide," he said. The group also still has several weeks before it has to decide whether to proceed with the plan, or defer again, the source added. A decision is due in the first week of November, by which time the group should have better visibility on market fundamentals and Iraqi and Kazakh compensation efforts. "How could we make a decision now when we don't even have September production figures?" the source said. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Hurricane Helene shuts in 29pc of US Gulf oil
Hurricane Helene shuts in 29pc of US Gulf oil
New York, 25 September (Argus) — Hurricane Helene, which is forecast to intensify as it heads for a late Thursday landfall in Florida, has shut in about 29pc of US Gulf of Mexico oil output. Around 511,000 b/d of US offshore oil output was off line as of 12:30pm ET, according to the Bureau of Safety and Environmental Enforcement (BSEE), while 313mn cf/d of natural gas production, or 17pc of the region's output, was also off line. Operators have so far evacuated workers from 17 offshore platforms. Helene was last about 110 miles north-northeast of Cozumel, Mexico, according to a 2pm ET advisory from the US National Hurricane Center, with maximum sustained winds of 80 mph. Helene is expected to be a major hurricane, with winds of at least 111mph, when it reaches the eastern Florida coast on Thursday evening. "A turn toward the north and north-northeast with an increase in forward speed is expected later today through Thursday, bringing the center of Helene across the eastern Gulf of Mexico and to the Florida Big Bend coast by Thursday evening," the center said. Shell restarting some production Although the hurricane will largely pass to the east of most offshore oil and gas production areas, companies have taken precautionary measures. Given a shift in the forecast track, Shell said late Tuesday that it had started to ramp up production at the Appomattox platform to normal levels, and was in the process of restoring output at the Stones facility, both off the coast of Louisiana. It paused some drilling operations. Chevron said earlier it was shutting in production at company-operated facilities in the Gulf of Mexico, and evacuating all workers. Equinor said it was shutting down the Titan oil platform. BP had earlier this week started to shut in production at its Na Kika and Thunder Horse platforms, southeast of New Orleans, and was curtailing output from its Argos and Atlantis facilities, as well as removing non-essential staff. US offshore production was disrupted earlier this month when Hurricane Francine made landfall, with up to 42pc of production was offline at one point. The offshore Gulf of Mexico accounts for around 15pc of total US crude output and 5pc of US natural gas production. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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