US economy grows by 2.8pc in 3Q, led by consumers

Market: Crude oil, Metals, Natural gas
30/10/24

The US economy grew by an annualized 2.8pc in the third quarter, led by consumer and government spending and exports.

Gross domestic product (GDP) growth slowed from 3pc in the second quarter, the Commerce Department reported today. Personal consumption grew at a 3.7pc pace, up from 2.8pc in the second quarter and 3.5pc a year earlier.

Today's GDP estimate is the first of three for the quarter, and comes in slightly below analyst estimates in a Trading Economics survey of 3pc growth. The latest figure marks a 10th quarter of GDP growth since a 1pc contraction in the first quarter of 2022. It comes ahead of a closely fought presidential election on 5 November in which the health of the economy is a major issue.

Exports grew by 8.9pc in the latest quarter compared with 1pc in the second quarter. Imports, which subtract from growth, grew by 11.2pc.

Government spending, including investment for defense, rose by 5pc following 3.1pc growth in the second quarter. Private domestic investment slowed to 0.3pc growth from 8.3pc growth. Residential investment fell by 5.1pc, as the housing market remains in a downturn, after declining by 2.8pc in the second quarter.

By Bob Willis

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30/10/24

TMX tanks to be completed in 4Q: Gibson

Calgary, 30 October (Argus) — Storage capacity near the origin of the Trans Mountain's crude pipeline system is on track to grow by 870,000 bl in the fourth quarter, Gibson Energy said today. The Calgary-based midstream company is in the final stages of constructing two 435,000 bl tanks at its Edmonton Terminal that can be used to stage crude for shipping on the 890,000 b/d Trans Mountain system. This includes the recently started 590,000 b/d Trans Mountain Expansion (TMX) that was put into service on 1 May and has been a boon for Canadian producers seeking a stronger connection with customers on the Pacific Rim. "We would agree with industry in general that TMX seems to have gone very well thus far," said Gibson's chief financial officer Sean Brown on Wednesday. "As we look at our terminal, we continue to see a very compelling service offering as it relates to new tankage demand there." The expanded 1,180-kilometer Trans Mountain system connects Edmonton, Alberta, to the docks at Burnaby, British Columbia, and has allowed shippers to better target refiners in California, China, Korea, India and Japan. The two new tanks will be used by oil sands producer Cenovus and is underpinned by a 15-year contract, according to Gibson. The new tanks will add to the 2.1mn bl of capacity Gibson already has at Edmonton, with the company noting it has room to expand by another 1mn bl. Volumes from the tanks would be pumped over to Trans Mountain's Edmonton Terminal which has 39 tanks and a total capacity of 9mn bl of its own. TMX has helped to drive company-wide throughputs higher by 5pc in the third quarter, as has Gibson's 1mn b/d South Texas Gateway crude terminal (SGT) in Ingleside, Texas, which it acquired for $1.1bn in August 2023. SGT can accommodate very large crude carriers (VLCCs) and is directly connected to the Permian and Eagle Ford basins via pipelines. Gibson plans to tap into another 670,000 b/d of Permian production with its Cactus II connection, expected to be completed in the third quarter of 2025. Cactus II is a joint venture between Enbridge and Plains that moves crude from Wink to Corpus Christi, Texas. Throughputs on Gibson's entire network averaged 1.82mn b/d in the third quarter, up from 1.74mn b/d in the same period 2023. Gibson Energy posted a profit of C$54mn ($40mn) on the quarter, up from a C$21mn profit during the same quarter of 2023. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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LatAm-China energy ties lurk for next US leader

30/10/24

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30/10/24

LatAm-China energy ties lurk for next US leader

Sao Paulo, 30 October (Argus) — China's growing economic reach into Latin America's energy and commodities has figured little in the latest US presidential campaign, but either Kamala Harris or Donald Trump may eventually have to face the topic. China began formally trying to increase its reach into Latin America in 2018, when it invited the region to be a "natural extension" of its Belt and Road Initiative (BRI). The effort has brought mixed results. So far, 22 countries in Latin America and the Caribbean have joined the massive Chinese infrastructure initiative, but hydrocarbons producers such as Colombia and regional powerhouse Brazil have not. The latter wants to "take the relationship with China to a new level without having to sign an accession contract," the Brazilian special presidential adviser for international affairs Celso Amorim said on 28 October. This came after agriculture minister Carlos Favaro said earlier that joining the BIR would be "positive" for the country. "There are projects that Brazil has defined as a priority and that may or may not be accepted [by Beijing]," Amorim said. Still, China has found other ways of increasing its grasp in Brazil, such as increasing exports of electric vehicles — with automaker BYD setting a R5.5bn ($1.1bn) investment plan in the country — and crude . But China is a major trade partner for all of Latin America. Exports of all goods from Latin America and the Caribbean to China reached a record $208bn in 2023, with Chinese imports into those regions hitting $242bn, according to Boston University Global Development Policy Center. Around 70pc of those exports are of copper, soybeans and crude — the two latter mainly coming from Brazil — while another 20pc comprise of beef and livestock. With or without the BRI, China's larger grasp in Latin America is seen as problematic in the US by both sides of the political spectrum. "The discourse of competition between the US and China has crossed party lines," according to Conrado Baggio, an international relations professor in Cruzeiro do Sul University. "Any candidate for president needs to present a firm and combative rhetoric towards Beijing." Chinese efforts de-dollarize the world economy also concern Washington, but mildly. China along with the other Brics countries — Brazil, Russia, India and South Africa — have led efforts to reduce the world's economy dependence on the US dollar and are working on an independent crossborder payment settlement platform to "minimize trade barriers." But results have been mixed as well. For instance, the Chinese yuan surpassed the dollar as the main currency in bilateral trades between Brazil and China in April-June 2023. But the American currency is still the main coin on over 80pc of Brazilian trade with other countries. "De-dollarization initiatives have hardly gone beyond rhetoric," Baggio said. Harris and Trump have opposing views on many topics and their approach to China is no different. Trump is likely to take a more confrontational stance on China, including higher tariffs and sanctions. That could naturally increase trade between Latin America and China, according to Fernando Galvao, a Brazilian economic analyst. On the other side of the aisle, Harris might choose a more diplomatic strategy. "Harris may prioritize rebuilding international alliances and strengthening multilateral institutions," Galvao added. Still, a Harris administration is more likely to emphasize environmental and human rights issues, which could pressure Latin America to adopt more sustainable policies. Failure to do so could lead to more trade with China, he added. But although the US will certainly keep an eye on China's relationship with Latin America, that is hardly the main concern within the US' foreign relations scope. "Given Washington's increasing involvement in Europe, with Russia and Ukraine, and in the Middle East, with Iran and Israel, Latin America may occupy a secondary position within the US' concerns," according to Baggio. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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UK government consults on oil and gas scope 3 emissions

30/10/24

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30/10/24

UK government consults on oil and gas scope 3 emissions

London, 30 October (Argus) — The UK government has opened a consultation seeking views on assessing the effects of scope 3 — or end-use — emissions from proposed offshore oil and gas projects. "Scope 3 emissions from downstream activities need to be assessed… in relation to offshore oil and gas production activities", the government said today. It proposed that a baseline scenario is defined for assessing scope 3 emissions, to set out how the environment "is likely to evolve without the development of a proposed project". The government also proposed that information on "relevant scope 3 categories" is included when a developers applies for a permit. This would include the effects of emissions from the combustion of oil or gas, as well as "other downstream activities", such as refining or transport of fuels. The UK's current process means that developers applying for consent must provide information on scope 1 and 2 — operational — emissions in an environmental statement. But scope 3 emissions are not included, despite making up around 80-95pc of emissions for a typical oil and gas company. The consultation was spurred by a ruling made in June by the UK's Supreme Court. The judgment ruled that consent for an oil development in southern England was unlawful, as the scope 3 emissions were not considered. The government — which was elected in early July, shortly after the ruling — has halted the assessment of any environmental statements related to oil and gas extraction and storage activities, including any that were already being assessed. These would be deferred until the new environmental guidance was in place, expected in spring 2025. The consultation will close on 8 January 2025. Separately, the government will consult by the end of this year on the implementation of its commitment to issue no new oil and gas licences to explore new fields, it said today. The UK has a legally-binding target of net zero emissions by 2050. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Cepsa rebrands to Moeve to reflect sustainability shift

30/10/24

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30/10/24

Cepsa rebrands to Moeve to reflect sustainability shift

Madrid, 30 October (Argus) — Spain-based integrated energy company Cepsa has changed its name for the first time in its 95 years of existence, to Moeve (pronounced Moo-eh-vey). The change reflects Cepsa's transition "in which the majority of profits will come from sustainable activities by the end of this decade," said chief executive Maarten Wetselaar. Cepsa has sold nearly 70pc of its oil and gas production over the past two years, including its stakes in upstream assets in Abu Dhabi , in Peru and in Colombia . It has retained stakes in light crude and gas production in Algeria, which has a significantly lower carbon footprint. The company reported provisional working interest crude production of 36,000 b/d in July-September, down from 80,000 b/d in the same period of 2021. Since then it has announced an €8bn ($8.65bn) investment strategy to decarbonise much of its business through ventures such at the planned 2GW Andalusian Hydrogen Valley , announced at the end of 2022, together with second-generation biofuels, biomethane and renewables development. Cepsa, or Compañia Espanola de Petroleos SA, was founded in 1929. It has been been majority controlled by Abu Dhabi sovereign wealth investors IPIC and Mubadala Investment Company since 2011. US investment fund Carlyle acquired 37pc of the firm in 2019. By Jonathan Gleave Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Brazil fossil fuel subsidies outpace renewables: Study

29/10/24

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29/10/24

Brazil fossil fuel subsidies outpace renewables: Study

Sao Paulo, 29 October (Argus) — Brazil's spending on fossil fuels subsidies in 2023 was around 4.5 times larger than its spending on renewables subsidies, according to a study published by the institute of socioeconomic studies Inesc. The country spent R99.8bn ($17.49bn) in subsidies for both fossil fuels and renewables in 2023, a 3.6pc increase from 2022, the study said. Of the total, R81.74bn were related to fossil fuels — a 0.5pc decrease from a year prior — while R18.06bn went to renewable sources, a near 27pc hike from 2022. The slight fossil fuel subsidies reduction was due to the return of taxes on gasoline, such as the VAT-like PIS/Confins, the study said. "The government lost the chance of providing greater relief for public coffers as it decided to maintain exemptions for diesel," it added. But while incentives to fossil fuel consumption decreased, those for exploration and production activities increased by R5.55bn. Cassio Carvalho, a co-author of the study for Inesc, said the fossil fuels subsidies will harm Brazil's energy transition. "The study indicates that consumers are bearing the subsidies for renewables through electricity bills, while the oil and natural gas industry remains untouched," Carvalho said. Ending subsidies to fossil fuels is an "unavoidable global commitment" laid out in the UN Cop 28 climate summit in Dubai, said Alessandra Cardoso, the other co-authored of the study. "What is expected of the Brazilian government is that it recognizes the problem of production subsidies as a domestic problem, the solution to which involves global reform," she said. "Brazil needs to take on this agenda as part of its leading role in the global climate scenario, especially as it will host Cop 30." Brazil will host Cop 30 in 2025 in Para's state capital Belem, on the edge of the Amazon forest. By Lucas Parolin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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