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US oil majors jump on AI data centre bandwagon

  • Spanish Market: Crude oil, Natural gas
  • 27/01/25

As the race picks up to meet the massive energy needs of data centres behind the artificial intelligence (AI) revolution, ExxonMobil and Chevron are looking to grab a slice of the action. The US oil majors are making tentative inroads into the electricity business with early plans to build natural gas-fired power plants twinned with carbon capture technology to trap the emissions produced.

Electricity demand in the US is soaring as technology giants scramble to power data centres. While wind and solar have a role to play, small nuclear reactors have been touted as one solution to meet the expected huge ramp-up in demand, but they are at least a decade away. That leaves natural gas to fill the gap and opens the door to companies such as ExxonMobil and Chevron, which have prior experience of developing power projects to run their own operations.

"What we know from Big Tech is that they all have carefully crafted sustainability roadmaps," bank Raymond James' investment strategy analyst, Pavel Molchanov, says. "That means they need to balance this insatiable need for electricity with lower emissions. And carbon capture can be a very elegant solution to do exactly that." The majors see themselves as having an inbuilt advantage in being able to get large-scale infrastructure projects off the ground in a timely fashion. Any power plants they end up building could be located next to data centres, without having to rely on an already overburdened grid. "It's project management, it's supply chain development and sort of having a vertically integrated approach," Molchanov says. "These companies absolutely have that skill set."

Unlike their European peers, ExxonMobil and Chevron have mostly shied away from renewable power on the grounds that the returns are too low and they have little expertise in this field. Instead, their low-carbon goals have focused on technologies such as carbon capture and storage (CCS), which play to core strengths. Adding such a component to gas-fired plants gives them an opportunity to showcase this preferred strategy. That was a point hammered home by ExxonMobil chief executive Darren Woods at last month's strategy update, when he maintained that the company still has little interest in getting into the power business as such. "We don't bring a lot of value creation to the power generation step, in and of itself," Woods said. "It's the ability to provide decarbonised natural gas to that power system, and the ability to capture the CO2 and then to transport it and sequester it, where we bring the value."

Generation X factor

Initial engineering and design work is already under way on such a project, ExxonMobil chief financial officer Kathy Mikells said. "The customer feedback has been incredibly encouraging," she added. ExxonMobil plans to trap more than 90pc of the CO2 from the plant's operations, and will tap its vast network of CO2 pipelines and sequestration sites — acquired as part of the $4.9bn acquisition of Denbury in 2023 — to transport and permanently store the emissions underground.

Chevron chief executive Mike Wirth said recently that his company has been "deeply engaged" in conversations with the various hyperscalers involved in the buildout of data centres and in developing new AI tools. "America is blessed with an abundance of natural gas, and I think you're going to see a buildout of natural gas fired power generation that will support these data centres," he added. "We're certainly working on ideas like that."

Surging demand from AI and data centres will play a part in supporting the investment case for the oil and gas industry for the remainder of the decade, according to the world's leading oil services contractor SLB. "AI is the X factor for our industry," SLB chief executive Oliver Le Peuch says.


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03/02/25

Trump makes U-turn on Canada, Mexico tariffs: Update

Trump makes U-turn on Canada, Mexico tariffs: Update

Washington, 3 February (Argus) — US president Donald Trump reversed course on planned tariffs on imports from Canada and Mexico, delaying their implementation by one month. Trump over the weekend issued executive orders for a 25pc tariff on all imports from Mexico, a 25pc tariff on non-energy imports from Canada, a 10pc tax on Canadian energy imports and a 10pc tariff on all imports from China, all to be effective on 4 February. But Trump delayed the tariffs on Mexico and Canada by a month and has indicated that tariffs on China likewise could be subject to negotiations with Beijing. Trump's decision-making on Mexico and Canada tariffs so far looks like a signature move from his first term — escalatory rhetoric and action followed by de-escalation after extracting concessions that do not appear to be significant. Trump said today he agreed to postpone the implementation of tariffs on Mexican goods after receiving assurances from Mexico president Claudia Sheinbaum that she would immediately reinforce the shared border with 10,000 national guard troops. Trump also cited similar assurances from Canadian prime minister Justin Trudeau. "As President, it is my responsibility to ensure the safety of ALL Americans, and I am doing just that," Trump said via his social media platform. "I am very pleased with this initial outcome." In both cases, the border security pledges touted by Sheinbaum and Trudeau recast initiatives already planned or underway. Trump told reporters today he would "be speaking to China probably over the next 24 hours" — likely meaning the country's president Xi Jinping. Unlike Mexico and Canada, China has taken a restrained stance to Trump's announcement of tariffs. Like the US immediate neighbors, China already has been taking steps to cut off the illegal manufacturing and exports of precursors for fentanyl — the pretext for Trump's tariffs. Things can only get bitter The announcement of tariffs that would have directly hit US energy trade will leave many in the industry scratching their heads about Trump's future moves. A major trade war that would have severely curtailed the flow of energy and other commodities across North America is averted for now, but Trump is signaling that tariffs remain a key plank on his policy agenda. Trump has shrugged off any negative impacts on the US energy sector and the broader economy, saying over the weekend that "WE WILL MAKE AMERICA GREAT AGAIN, AND IT WILL ALL BE WORTH THE PRICE THAT MUST BE PAID." In remarks to reporters today, Trump pushed back against criticism of negative impacts of his tariffs. "Very simply, every single country that you're writing about right now is dying to make a deal," Trump said. In the immediate term, the Trump administration will hold high-level talks with the governments of Mexico and Canada against the deadline for the delayed imposition of tariffs. But down the line, there are other motivations for Trump to move forward with tariffs against key US trading partners. Trump today once again decried the "massive deficits" the US has in trade with Canada, Mexico, China, the EU and the UK. And then there is the lure of tariff revenue that Trump — with an eye toward upcoming congressional deliberation of extending tax cuts beyond 2025 — says would be sufficient to offset lower personal and corporate taxes. Trump set a 1 April deadline for US government agencies to prepare a report on "unfair trade practices" by key US trading partners, which would kick off a legal process for imposing tariffs in the following two months. Trump is separately planning to review the US-Mexico-Canada free trade agreement that his first administration negotiated in 2019. Unlike the tariffs that were due to be imposed on Tuesday by an executive order, the broader plan for tariffs scheduled to kick in after 1 April would be harder to reverse or to negotiate away. And his first two weeks in office show that, despite his claim to be championing America's "energy dominance", the US energy industry would not be exempt during the upcoming trade wars. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US delays Canada tariffs by a month: Trudeau


03/02/25
03/02/25

US delays Canada tariffs by a month: Trudeau

Calgary, 3 February (Argus) — US tariffs threatened against Canada will be delayed by 30 days, prime minister Justin Trudeau said this afternoon after talking with US president Donald Trump. "I just had a good call with President Trump," Trudeau posted on X, before describing Canada's plan to send thousands of officials to the US border to police fentanyl trafficking. The two leaders spoke twice on Monday, the eve of sweeping tariffs Trump had proposed against Canada and Mexico . Earlier in the day Mexican tariffs were also delayed by a month after similar promises for more troops on the border. "Nearly 10,000 frontline personnel are and will be working on protecting the border," Trudeau wrote. "In addition, Canada is making new commitments to appoint a Fentanyl Czar, we will list cartels as terrorists, ensure 24/7 eyes on the border, launch a Canada-US Joint Strike Force to combat organized crime, fentanyl and money laundering." Canada will be putting C$200mn ($139mn) towards tackling organized crime and fentanyl. In light of the US-Canada tariff pause, manufacturing and mineral-heavy Ontario said it would pause retaliation measures of its own announced earlier in the day. That would have banned US companies from provincial contracts, removed American products in liquor stores and cancelled a contract with Elon Musk's Starlink internet services. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump defends U-turn on Mexico tariffs


03/02/25
03/02/25

Trump defends U-turn on Mexico tariffs

Washington, 3 February (Argus) — US president Donald Trump insisted today that his abrupt decision to delay by a month the decision to impose 25pc tariffs on imports from Mexico had nothing to do with the reaction of financial markets or criticism from the normally reliable quarters of his support. Trump's decision-making on Mexico tariffs so far looks like a signature move from his first term — escalatory rhetoric and action followed by de-escalation after extracting concessions that do not appear to be significant. Trump said today he agreed to postpone the 4 February implementation of 25pc tariffs on Mexican goods by one month, after receiving assurances from Mexico president Claduia Sheinbaum that she would immediately reinforce the shared border with 10,000 national guard troops. Trump said there would be negotiations in the coming weeks between Mexican officials and US secretary of state Marco Rubio, secretary of the treasury Scott Bessent and secretary of commerce Howard Lutnick to prevent the tariffs from going into effect. Trump's plans to impose import taxes on Mexico, Canada and China weighed on stock markets early on Monday and boosted oil prices and the US dollar. The effects of his tariffs and any retaliatory actions by Mexico would have been felt on both sides of the border and would have severely curtailed the flow of energy and other commodities between the two countries. "There was no blinking", Trump said in a free-flowing gaggle with reporters at the White House. "She did agree to 10,000 soldiers on the border. I would say that's a lot." Trump in 2019 similarly threatened to impose 5pc tariffs on all Mexican goods. He relented when former president Andres Manuel Lopez Obrador said Mexico would deploy 21,000 national guard troops to contain the flow of migrants toward the US. "Dumbest Trade War" or deal pathway? Trump, who invited the press into the Oval Office today to observe the signing of an executive order establishing a sovereign wealth fund for the US, heaped praise on News Corp owner Rupert Murdoch, who was invited as a guest at the ceremony. But Trump pushed back against News Corp-owned Wall Street Journal 's editorial board, which described his tariffs on US neighbors as "the Dumbest Trade War". "I don't agree with [Murdoch] on many things," Trump said. "The Wall Street Journal is wrong, because, very simply, every single country that you're writing about right now is dying to make a deal." Canada, which is also subject to a 25pc tariffs beginning tomorrow, so far has not made a deal with the US. Trump said he spoke with Canadian prime minister Justin Trudeau this morning and would speak again at 3pm ET. "We're going to talk again at three o'clock, right after my next meeting, and we'll see what happens," Trump said. "I can't tell you what's going to happen." The US has yet to offer details on implementing tariffs or to break down which Canadian energy commodities would be subject to a lower, 10pc import tax. The White House executive order listed the exemptions as "crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water and critical minerals". Trudeau's government has unveiled a more detailed list of US imports , worth C$30bn ($21bn), that would be subject to retaliatory tariffs, to be followed by an additional C$125bn of products later this month. Trump, who imposed a lower, 10pc, tariff on imports from China, said today that imports from that country would be subject to higher taxes soon. But he added, "I will be speaking to China probably over the next 24 hours." Trump today again proposed a joint US-China ownership of social media platform TikTok, the latest of many issues that divide the two countries. He also repeated his allegation that China "is involved with the Panama Canal" and that the US would wrest back control over the waterway. In addition to pushback over tariffs, Trump today faced harsh criticism from Democratic lawmakers after he ordered the shutdown of the US Agency for International Development, which is responsible for disbursing US humanitarian aid and carrying out development programs globally. Senior Democratic lawmakers joined the staff of the agency in front of its headquarters, where security guards were preventing anyone from entering. "I love the concept [of that agency], but they turned out to be radical left lunatics," Trump said. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US delays Mexico tariffs by a month: Update


03/02/25
03/02/25

US delays Mexico tariffs by a month: Update

Adds comments from press conference, White House response, historic context. Mexico City, 3 February (Argus) — The US has agreed to postpone the 4 February implementation of 25pc tariffs on Mexican goods by one month to allow more time for negotiations, President Claudia Sheinbaum said today. Under an agreement with the US, Mexico will immediately reinforce its border with the US with 10,000 national guard troops to limit drug trafficking into the US, with a specific focus on fentanyl, Sheinbaum posted on social media platform X. The US pledged to take stronger action to curb the flow of high-powered firearms into Mexico, she said. The pause will allow "Mexico time to demonstrate good results for the US people and our people" on key security concerns, Sheinbaum said. US president Donald Trump confirmed the tariff delay in a social media post, saying there would be negotiations in the coming weeks with Mexican officials and US secretary of state Marco Rubio, secretary of the treasury Scott Bessent and secretary of commerce Howard Lutnick. The White House praised Mexico's willingness to respond positively to the tariff threats, while characterizing the Canadian response as [a] misunderstanding. "The good news is that in our conversations over the weekend, one of the things we've noticed is that Mexicans are very, very serious about doing what President Trump said," White House National Economic Council director Kevin Hassett said in a broadcast interview. Canada had "misunderstood the plain language of the executive order and they're interpreting it as a trade war." Trump said this morning that he "looks forward to negotiations" with Sheinbaum to reach a deal between the countries. He is also talking to Canadian premier Justin Trudeau later today. The announcements today do not address Trump's complaints of a trade deficit with Mexico, which Sheinbaum said during a press conference today the US misinterprets as a negative. Both the US and Mexico benefit from the region becoming more competitive, she said. Mexico will also keep its retaliatory tariffs on the table: "We will save Plan B for later, if necessary," Sheinbaum said. The current tensions are similar to those from 2019, when Trump threatened to impose 5pc tariffs on all Mexican goods. He relented when former president Andres Manuel Lopez Obrador said Mexico would deploy 21,000 national guard troops to contain the flow of migrants toward the US. If the tariffs were implemented, it would disrupt the energy trade between the US and Mexico. Nearly all of Mexico's roughly 500,000 b/d of crude shipments to the US in January-November 2024 were waterborne cargoes sent to US Gulf coast refiners. Those shipments in the future could be diverted to Asia or Europe. Mexico also imports much of its road fuels and LPG from the US. But the country is unlikely to hit these goods with retaliatory tariffs, according to market sources. By Antonio Gozain and Cas Biekmann Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Ice TTF gas risk reduction contract positions soar


03/02/25
03/02/25

Ice TTF gas risk reduction contract positions soar

London, 3 February (Argus) — Risk reduction contracts held at the Dutch TTF gas trading point on the Intercontinental Exchange (Ice) soared to a near record high in the week ending 24 January, suggesting significant hedging activity. Firms take on risk reduction contracts mostly for hedging purposes — they offset a physical position with a paper position so as to reduce exposure to price fluctuations. When firms inject gas into storage, they might for example open a risk reduction contract on paper to offset this position in the future. The gross amount of gas that commercial undertakings hold under long and short risk reduction contracts combined reached its second highest since at least 2018 at 1.38PWh in the week ending 24 January, the most recent data from Ice ( see risk reduction graph ) show. Firms increased their long positions by 19TWh week on week to 581TWh, and their short positions by 13TWh to 794TWh. After netting the two off, commercial undertakings hold a net short position of around 214TWh of risk reduction contracts, down from a recent peak of 228TWh in the week ending 3 January. Higher LNG deliveries to Europe in recent weeks may have driven some of the interest in risk reduction contracts, given that importers need to hedge ahead of time in order to lock in margins. TTF prices have increased enough in recent weeks to firmly close the arbitrage between the Atlantic and Pacific basins, attracting more LNG cargoes to Europe. European LNG imports soared in January to their highest for any month since April 2023. The TTF summer 2025 contract's growing premium to the winter 2025-26 market may have additionally boosted interest in risk reduction contracts. The spread widened sharply after Germany's THE announced a consultation for a new kind of storage tender that would subsidise injections if seasonal spreads stay inverted , with many traders seeing this as a signal that German storage sites will be refilled , regardless of commercial incentives. The TTF summer 2025-winter 2025-26 spread jumped to +€4/MWh on 21 January, the day of THE's announcement, from +€2.73/MWh a day earlier, and widened further to as high as +€6.39/MWh by 30 January. In terms of total net positions across all contract types, investment funds held a net long of nearly 278TWh in the week ending 24 January, the highest since late November. At the same time, investment and credit firms held their highest net short position since October 2021 at 245TWh. Commercial undertakings held a net total short position of 33TWh ( see net positions graph ). By Brendan A'Hearn ICE TTF net contract position TWh Commercial undertakings' risk reduction contract positions TWh Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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