CCUS and nuclear plans confirmed in UK budget

Spanish Market: Crude oil, Electricity, Emissions, Natural gas
15/03/23

UK finance minister Jeremy Hunt announced Wednesday a raft of measures that his government says are designed to boost resilience to future energy price shocks, including increased investment in carbon capture schemes, support for new nuclear plants and an extension of energy efficiency programmes. But the government's controversial windfall tax on offshore oil and gas profits did not get a mention in today's budget statement.

As anticipated, the UK finance minister announced plans to further develop the UK's carbon, capture, utilisation and storage (CCUS) industry. "I am allocating up to £20bn ($24bn) of support for the early development of CCUS, starting with projects from our east coast to Merseyside to north Wales, paving the way for CCUS everywhere across the UK as we approach 2050," Hunt said, adding that this will support up to 50,000 jobs and attract private-sector investment. The government's existing target to capture 20mn-30mn t/yr of CO2 by 2030 remains intact, he said.

The planned investment marks a sharp rise from the government's previous commitment of £1bn for CCUS funding, although some businesses have pledged more. The CCUS projects selected "will also receive funding while operating through their contract length", which will last around 10-15 years depending on the project, the finance ministry told Argus today. "This funding will help support the construction and operation of this vital CCUS technology across a number of industrial projects. It is not a specific payment for capturing carbon but an envelope of funding covering support through capital grants, contracts for difference and other sector specific business model contracts," the ministry added.

The £20bn of funding will be spread out over 20 years, according to UK energy minister Grant Shapps, while an energy ministry official added that it is not possible to know the exact funding profile for CCUS projects as this is still under negotiation. A shortlist of projects for the first phase of CCUS deployment will be announced this month, while other projects will be able to "enter a selection process for Track 1 expansion launching this year", the government said. The government will also select two additional CCUS clusters to add to the HyNet and East Coast clusters, which were selected as the UK's first two CCUS projects in October 2021.

Among the other energy-related announcements in today's budget was the launch of what the government is calling the "Great British Nuclear" initiative. It is designed to "bring down costs and provide opportunities across the nuclear supply chain to help provide up to one-quarter of our electricity by 2050", Hunt said. He also announced the launch of the UK's first competition for small modular reactors.

Road fuel excise duty rates are to be kept at current levels for another 12 months through the extension of a temporary 5 pence/litre cut introduced last year. Meanwhile, the UK's Climate Change Agreement scheme, which gives eligible businesses tax relief on energy efficiency measures, is to be extended by two years. And Hunt also confirmed that the government's Energy Price Guarantee, which capped typical yearly household energy bills to £2,500, will be kept in place for an additional three months until the end of June.

Critical thinking

Responding to the budget, environmental activist group Greenpeace was critical of what it said was "the stranglehold [that] fossil fuel and nuclear lobbies have" on the government.

"Squandering taxpayers' money on nuclear reactors that don't even exist yet and fanciful carbon capture is irresponsible, and does nothing to reduce our emissions now. Committing to £20bn over 20 years is frankly pathetic compared to the green growth investments being made in the US, EU and China," a Greenpeace spokesperson said. "The government must instead prioritise renewables, invest in a smarter grid, and insulate people's homes at the scale we need to keep us warm, save money on bills, and bring down carbon emissions."

Notable by its absence from Hunt's budget statement was the status of the Energy Profits Levy, a windfall tax on North Sea oil and gas profits which was increased to 35pc from 25pc from the beginning of January. Earlier this month, North Sea producer Harbour Energy complained that its 2022 profit had been "all but wiped out" by the levy. UK North Sea operators met government ministers in December to try to set an oil price floor under which the windfall tax would not apply, a measure that Hunt is reportedly considering.

By Jon Mainwaring, Georgia Gratton and Caroline Varin

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09/04/25

Colombian crude gains on US tariff uncertainty

Sao Paulo, 9 April (Argus) — Colombian heavy sour crudes have reached their narrowest discounts to Ice Brent in at least four years, supported by uncertainty surrounding US tariffs and tight supplies of similar grades. Castilla's discount to Ice Brent was $3.50/bl on Tuesday and Vasconia's was at $1.45/bl, $4.40/bl and $3.15/bl tighter than on 2 January, respectively. Castilla has not reached that narrow of a level against the benchmark since early 2021 and Vasconia has not since mid-2019. Outright prices were $60.89/bl for Vasconia and $58.84/bl for Castilla on Tuesday. Colombian crude discounts started to narrow in January after US president Donald Trump mentioned plans for a 25pc tariff on all imports from Mexico and Canada, which produce competing heavy sours. Amid the uncertainty, buyers opted to secure supply that might not face tariffs, sources said, despite delays in tariffs implementation in early February and March. But a sweeping executive order last week excluded energy commodities from tariffs, as well as trade covered under the US-Mexico-Canada free trade agreement (USMCA). Then on Wednesday Trump announced he will pause many of the tariffs on other products for 90 days, but no changes have been announced for energy imports . Despite Trump's tariff exemptions on crude imports to the US, tight availability of heavy supply for US Gulf refiners could still support relative values for Colombian grades. Subbing in Colombian crudes are seen as good substitutes for heavy crude from the US' nearest neighbors, especially Mexican supplies, which are widely used by US Gulf coast refiners. Additionally, Colombia's geographical location makes shipping to the US Gulf coast quicker and less costly compared with other South American countries, such as Ecuador, which also produces heavy sour crude. Further tightening heavy supply for Gulf coast refiners, the US government announced in March that the deadline for the end of Chevron's waiver to produce in Venezuela is 27 May, stopping the flow of crude to the US from its joint venture with state-owned PdV. Chevron brought about 222,000 b/d in Venezuelan crude to the US from January-November 2024. according to the US Energy Information Administration (EIA). Even with the volume representing a fraction of Gulf coast imports, it represents almost 30pc of total Colombian output. Its production reached 760,000 b/d in January, according to oil services chamber Campetrol, citing figures from hydrocarbons agency ANH. Further US tariffs on countries that take delivery of Venezuelan oil and natural gas could also make Colombian barrels more attractive, although Ecuadorean crudes are possible regional supply alternatives too. Meanwhile, Mexico's state-owned Pemex has faced quality issues with its crude production since late last year, which could lead to Gulf coast buyers turning to Colombian barrels as alternatives. Pemex acknowledged issues with salt and water levels in its crude in February but denied that international buyers have rejected shipments because of those concerns. Mexico's policy of expanding domestic refining has also contributed to a decline in crude exports to the US in recent years. Colombian crude values have also likely been supported by firmer competing Canadian crude values at the US Gulf coast. Canadian crude differentials have firmed in part because of upgrader turnaround season in Alberta's oil sands region, slowing production. The shutdown of the 622,000 b/d Keystone pipeline from the region after a spill in North Dakota on 8 April also limited supply, buttressing prices. By João Scheller Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

What do tariffs mean for the global gas market?

09/04/25

What do tariffs mean for the global gas market?

Some countries are considering retaliatory tariffs, while others hope to reduce their trade deficit in order to negotiate lower rates London, 9 April (Argus) — Newly announced US tariffs on goods entering the country and some of the countermeasures already announced by large trade partners are unlikely to cause any direct disruptions to global gas markets. But the indirect effects on gas supply and demand may be huge, stemming from a weaker macroeconomic outlook, fuel substitution and inflationary pressures on infrastructure development. US president Donald Trump on 2 April imposed a minimum 10pc tax on all foreign imports from 5 April,with much higher tariffs on selected countries that briefly came into force on 9 April, before Trump announced a 90-day pause. China is the only exception. It has announced retaliatory tariffs that could disrupt US energy exports, resulting in an escalation that has already brought up the respective levies to 125pc in the US and 84pc in China. These are unlikely to have any direct impact on LNG trade flows, as China had already stopped importing US LNG earlier this year. But disruptions to trade between the world's two largest economies may weigh heavily on manufacturing activity in China, in turn reducing industrial gas demand. And the ripple effects of disruptions to US LPG exports to China may alter fuel-switching economics in the region and beyond. Most other countries in Asia-Pacific have opted not to follow China's lead by retaliating against US tariffs, even though many have warned about the potential for long-term economic disruption. The Japanese government intends to negotiate a better tariff deal and is considering investing in the US' proposed 20mn t/yr Alaska LNG export project as part of wider efforts to reduce its trade surplus with the US. Countries in Asia-Pacific have been hit with some of the highest of Trump's targeted duties. The EU is keeping retaliatory measures on the table, but these are unlikely to include any levy on US LNG. Europe has become much more reliant on LNG imports after losing the bulk of its Russian pipeline supply, and imposing tariffs on energy imports would only reignite inflationary pressures that European countries have tried to curb over the past three years. The bloc says it is ready to negotiate on possibly increasing its US LNG imports to reduce its trade surplus and would zero out its tariffs on industrial imports if the US agrees to do the same. But Trump says this offer is not enough, citing the EU's upcoming Carbon Border Adjustment Mechanism as one of the "unfair trade practices" that justifies a tariff response. Nerves of steel Much greater risks for gas markets may stem from rising infrastructure costs in the US' upstream and midstream sectors, particularly as a result of earlier tariffs imposed on steel and aluminum imports. These present an immediate risk for US LNG developers, particularly for the five projects under construction and the six others expected to reach final investment decisions this year. Metals account for up to 30pc of the cost of building an LNG export plant. An LNG terminal can cost $5bn-25bn to build, depending on its size, with steel used for pipelines, tanks and other structural frameworks. US facilities can be built using some domestic metal, but higher prices for this may lead to construction and final investment decision delays for the country's planned liquefaction projects. US tariffs' primary effect on the domestic gas market stems from duties levied on non-energy goods used by the oil and gas industry, including steel and specialised pipeline components such as valves and compressors, which are imported from overseas. The US remains a net natural gas importer from Canada , but these flows are unlikely to be affected by trade tariffs given the lack of alternative supply sources available to some northern US states. US LNG project pipeline mn t/yr Project Capacity Expected start/FID Under construction Plaquemines 19.2 2025 Corpus Christi stage 3 12.0 2025 Golden Pass 18.1 2026 Rio Grande 17.6 2027 Port Arthur 13.5 2027 Waiting for final investment decision Delfin FLNG 1 13.2 mid-2025 Texas LNG 4.0 2025 Calcasieu Pass 2 28.0 mid-2025 Corpus Christi train 8-9 3.3 2025 Louisiana LNG 16.5 mid-2025 Cameron train 4 6.8 mid-2025 Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

German coalition eyes 'limited' foreign carbon credits

09/04/25

German coalition eyes 'limited' foreign carbon credits

Berlin, 9 April (Argus) — The parties likely to form Germany's next government today presented their coalition treaty, which pledges to allow the use of foreign carbon credits to reach the country's 2040 climate target. The treaty, presented in Berlin by the four party leaders Friedrich Merz of the CDU — the likely next federal chancellor — Lars Klingbeil and Saskia Esken of the SPD, and Markus Soeder of the CDU's Bavarian sister party CSU, stresses the parties' commitment to German and European climate targets, the Paris climate agreement, and reaching climate neutrality in Germany by 2045 "by combining climate action, economic competitiveness and social balance, and by focusing on innovation". "We want to remain an industrialised country and become climate neutral," the treaty reads. The parties' support for the EU's suggested interim target to reduce its emissions 90pc by 2040 compared with 1990 levels is conditional on two points. Germany must not be expected to go beyond its 88pc reduction target for 2040 enshrined in the country's climate action law. And its companies must be allowed, with a view to reducing their residual emissions in an "economically viable" way, to resort to "permanent and sustainable negative emissions", and to "credible CO2 reduction through highly qualified, certified and permanent projects" in "non-European partner countries". Making use of the latter activities should be permissible for up to three percentage points of the 2040 reduction target, although the "priority" for companies will be to reduce carbon emissions. And allowing these options must be reflected in the European Climate Law and the EU emissions trading system (ETS), the parties stipulate. The treaty also underlines the importance of "effective" carbon leakage protection to preserve Germany's "industrial value creation". The treaty calls for the European Green Deal and Clean Industrial Act to be further developed to "bring competitiveness and climate action together", and stresses the importance of carbon pricing instruments, which more countries should be persuaded to introduce. The parties also flag the importance of social acceptance, advocating an "economically viable price development" and pledging to ensure the smooth transition of Germany's domestic carbon price for the heating and transport sectors into the EU ETS 2 on the latter's launch in 2027. The parties pledge "immediately" to adopt a legislative package that enables carbon capture, transport, use and storage (CCU/CCS), particularly for industrial emissions that are difficult to avoid, and also for gas-fired power plants — a disputed issue within the SPD, and the reason why CCS legislation did not pass under the outgoing SPD-Green-led federal government. The new government said it will legally enshrine the "overriding public interest" of the construction of CCS infrastructure, as well as pledging to give the "highest priority" to ratifying the [amendment to the] London Protocol, allowing cross-border CO2 transportation, and to enter bilateral agreements with neighbouring countries on storing carbon. The new government will enable CO2 storage offshore in Germany's exclusive economic zone and the North Sea, as well as onshore where geologically suitable and accepted. The parties see direct air capture as a "possible" future technology to "leverage negative emissions". By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

China hikes US import tariffs to 84pc

09/04/25

China hikes US import tariffs to 84pc

Singapore, 9 April (Argus) — China will raise import tariffs on US goods by 50 percentage points to 84pc, effective 10 April, the country's State Council said today. The increase matches the hike in US tariffs on Chinese imports imposed by US president Donald Trump earlier today. China does not appear to have exempted any products from its higher tariffs, which will take effect at 12:01am local time on 10 April (4:01pm GMT on 9 April). "The US escalation of tariffs on China is a mistake on top of a mistake, which seriously infringes on China's legitimate rights and interests and seriously undermines the rules-based multilateral trading system," the State Council said. Trump's targeted import tariffs on the US' main trading partners, including a cumulative 104pc tariff on China, took effect earlier today. China's 84pc tariff increases to around 100pc for some commodities that were caught up in earlier rounds of tariffs announced in February and March, including crude, coal, LNG and some agricultural products. By Kevin Foster Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ice Brent below $60/bl for first time since Feb 2021

09/04/25

Ice Brent below $60/bl for first time since Feb 2021

London, 9 April (Argus) — Front-month Ice Brent crude futures prices today fell below $60/bl for the first time since 8 February 2021. The June contract hit an intra-day low of $59.77/bl at around 10:20 GMT, lower by 4.8pc on the day. The front-month has not settled below $60/bl on any trading day since 5 February, 2021. Accumulated losses in the futures contract are now more than $15/bl, or more than 20pc, since a combination of broad US tariffs and a surprise acceleration of Opec+ output return on 3 April ended around a month of consistent price gains. US tariffs on imports from a range of key trading partners take effect today. A 10pc baseline tariff on imports from nearly every foreign country already went into effect on 5 April. By Ben Winkley Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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