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US likely to renew Chevron waiver for Venezuela

  • : Crude oil, Oil products
  • 21/05/13

The US government is likely to renew Venezuela sanctions waivers for Chevron and four oil services companies as the White House reviews its broader policy toward Caracas, sources close to the process tell Argus.

The waivers allowed Chevron and services companies Schlumberger, Halliburton, Baker Hughes and Weatherford to continue operating in Venezuela after the previous US administration imposed oil sanctions on the Opec country in January 2019, with the goal of forcing President Nicolas Maduro out of power in favor of opposition leader Juan Guaido. As Maduro clung on and Guaido's support withered, the waiver conditions were tightened in April 2020 to allow the companies to preserve their assets but without maintaining them or paying local employees.

The current waivers lapse in early June. By the end of May the US is expected to roll them over for three or six months more, prolonging a status quo approach on an issue that President Joe Biden's administration does not view as a foreign policy priority. A restoration of the original waiver conditions which allowed Chevron to lift Venezuelan oil is possible, but much less likely than a simple rollover for now, Venezuela watchers say.

The White House inherited the sanctions from the administration of president Donald Trump, whose hawkish stance failed to dislodge Maduro but did help to win him political support among the country's burgeoning diaspora in November 2020 elections that he nonetheless lost. Current US officials have repeatedly signaled they are in no rush to change course on Venezuela while the Biden administration focuses on more pressing overseas issues such as China and the Middle East.

In Caracas, the US reluctance to act swiftly on Venezuela — even in the face of changing conditions — is underestimated by the government and its opponents alike. In recent weeks, Maduro has taken conciliatory steps, such as moving six jailed executives of state-owned PdV's US refining arm Citgo into house arrest. In a bid to regain political relevance and deflect blame for problems on the ground such as fuel shortages that sanctions have aggravated, Guaido this week indicated a willingness to negotiate with the government to bring about credible presidential elections, effectively burying his vaunted "end of the usurpation" strategy.

In Washington, some members of the progressive flank of Biden's Democratic party are pressing the administration to ease sanctions, backing calls to restore diesel swaps by non-US oil companies, but traction remains limited.

Resistance to compromise

Both Maduro and Guaido face resistance to further compromise in their own camps. This resistance is reflected in behind-the-scenes moves to reform Venezuela's hydrocarbons law to allow PdV's foreign partners, most notably Chevron, to have a controlling stake in oil joint ventures, on the understanding that the national oil industry cannot recuperate without large-scale foreign investment. Maduro set the ball in motion last year with "anti-blockade" legislation aimed at bringing back investors. But nationalistic members of the governing united socialist party (PSUV) reject any perceived revival of the 1990s "apertura" policy, which opened Venezuela back up to foreign oil investment. The main Orinoco heavy oil belt projects that grew out of that ill-fated policy — including Chevron's rebranded PetroPiar — were nationalized a decade later.

On the opposition side, hardliners oppose any softening of sanctions or return of oil companies before Venezuela undergoes a comprehensive political transition, starting with credible presidential elections on an accelerated timetable. Although state and municipal elections are scheduled for later this year, the next presidential elections are not scheduled until 2024. On the oil legislation, Maduro's main opponents maintain that Venezuela needs a new hydrocarbons law altogether to bring the country up to date on fiscal terms, regulation and environmental conditions.

Stay lady stay

For now, Chevron is hoping to stay in Venezuela in anticipation of a future revival of its operations. "Our legacy in Venezuela dates back to the 1920s and we remain hopeful that General License 8 will be renewed to continue our long constructive history in the country, where we support social investment programs that provide needed services for local communities," Chevron told Argus. The company says it has spent more than $100mn toward "diverse social initiatives" in Venezuela in the last 10 years, and remains "committed to the safety and wellbeing of our employees and their families, the integrity of our joint venture assets, and the company's social and humanitarian programs during these challenging times."

PdV is the majority shareholder in Chevron's oil assets, of which only PetroPiar and PetroBoscan in western Venezuela were active when the US company was forced to halt activities last year. Chevron has 30pc of PetroPiar and 39.2pc of PetroBoscan. The company also has 34pc of the PetroIndependencia joint venture in the oil belt, and 25.2pc of PetroIndependiente in the west. And on the maritime border with Trinidad and Tobago, Chevron has 60pc of the Loran natural gas field.

Chevron highlights its modest operational role in Venezuela even when it was still an active participant. Its net share of production from joint ventures averaged around 35,300 b/d of oil equivalent (boe/d) in 2019, representing just 6pc of Venezuela's total production at the time.

Venezuela is currently producing around 500,000 b/d of crude, around the same as last year and down from about 820,000 b/d in 2019, according to Argus estimates.


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24/11/21

Cop: EU, four countries commit to 1.5°C climate plans

Cop: EU, four countries commit to 1.5°C climate plans

Baku, 21 November (Argus) — The EU, Canada, Mexico, Norway and Switzerland have committed to submit new national climate plans setting out "steep emission cuts", that are consistent with the global 1.5°C temperature increase limit sought by the Paris Agreement. The EU and four countries made the pledge at the UN Cop 29 climate summit in Baku, Azerbaijan today, and called on other nations to follow suit — particularly major economies. Countries are due to submit new climate plans — known as nationally determined contributions (NDCs) — covering 2035 goals to the UN climate body the UNFCCC by early next year. The EU, Canada, Mexico, Norway and Switzerland have not yet submitted their plans, but they will be aligned with a 1.5°C pathway, EU climate commissioner Wopke Hoekstra said today. The Paris climate agreement seeks to limit the global rise in temperature to "well below" 2°C and preferably to 1.5°C. Canada's NDC is being considered by the country's cabinet and will be submitted by the 10 February deadline, Canadian ambassador for climate change Catherine Stewart said today. Switzerland's new NDC will also be submitted by the deadline, the country's representative confirmed. Pamana's special representative for climate change Juan Carlos Monterrey Gomez also joined the press conference today. Panama, which is designated as carbon negative, submitted an updated NDC in June. It is planning to submit a nature pledge, Monterrey Gomez said. "It is time to streamline processes to get to real action", he added. The UK also backed the pledge. The UK announced an ambitious emissions reduction target last week. The UAE — which hosted Cop 28 last year — released a new NDC just ahead of Cop 29, while Brazil, host of next year's Cop 30, released its new NDC on 13 November during the summit. Thailand yesterday at Cop 29 communicated a new emissions reduction target . Indonesia last week said that it intends to submit its updated NDC ahead of the February deadline, with a plan placing a ceiling on emissions and covering all greenhouse gases as well as including the oil and gas sector. Colombia also indicated that its new climate plan will seek to address fossil fuels, but it will submit its NDC by June next year . By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: EU says finance draft text not acceptable


24/11/21
24/11/21

Cop: EU says finance draft text not acceptable

Baku, 21 November (Argus) — The latest draft of the text on climate financing presented at the UN Cop 29 climate summit is not ambitious enough on mitigation — reducing emissions — and "clearly unacceptable," EU energy commissioner Wopke Hoekstra said today. Parties must agree at Cop 29, in Baku, Azerbaijan, on a new collective quantified goal (NCQG) — a new climate finance target — building on the $100bn/yr that developed countries agreed to deliver to developing countries over 2020-25. The text is the main outcome for the summit. "What we had on our agenda was not just to restate the [Cop 28] consensus but actually to enhance that and to operationalise that," but the text goes in the opposite direction, Hoekstra said. Parties to last year's Cop 28 summit in Dubai made an historic pledge to "transition away" from all fossil fuels. The EU has warned against any backsliding on this pledge . "We cannot accept the view that the previous Cop did not happen," Hoekstra said. A draft text on the mitigation work programme — a process that focuses on emissions reduction — was released by the Cop 29 presidency in the early hours of this morning. It does not mention phasing out or reducing fossil fuels in energy systems, or reference the agreement reached on the latter point at Cop 28 last year. Hoekstra indicated today's text does not provide enough clarity to allow the EU to put a concrete number on the amount of climate finance that should be available. The bloc has insisted the final number for climate financing can come only when other elements, including the structure and contributor base, are settled. But recipient country groups such as the G77 and Like-Minded Developing Countries (LMDC) groups have expressed impatience at the lack of a concrete number. Minor bright spots in the numerous draft texts released overnight include those on Article 6, which governs international carbon credits, Hoekstra said. But the commissioner is "sure there is not a single ambitious country who thinks this is nearly good enough." By Rhys Talbot Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexico to keep some energy regulator independence


24/11/20
24/11/20

Mexico to keep some energy regulator independence

Mexico City, 20 November (Argus) — Mexico's lower house constitutional affairs commission changed its draft bill on eliminating independent regulators to keep the energy regulatory commission (CRE) independent on technical issues even after the energy ministry absorbs it. In an earlier draft, respective ministries would take over the functions of previously independent regulators. With the change, CRE will become a "decentralized body," said President Claudia Sheinbaum. It will retain technical independence but will no longer be an autonomous regulator able to set its budget, the president added. Sheinbaum did not mention hydrocarbons regulator CNH, which could take up a similar position as CRE. Antitrust watchdog Cofece and telecommunications regulator IFT would become similarly decentralized bodies with technical independence from the economy ministry. Transparency watchdog Inai will disappear but a new anticorruption ministry will take over its functions. Inai in recent years has forced state-owned oil company Pemex to release more detailed data about harmful emissions and fuel theft, among other issues. Mexico's independent regulators and watchdogs still formed part of the 2025 budget proposal the government revealed this week. The actual independence of Mexico's energy regulators has been questioned since the previous government, as the number of permits granted by CRE to private companies has dropped in favor of state-owned companies . Critics have raised concerns regarding the bill, arguing it will destabilize Mexico's balance of power and undermine investor confidence. The proposal also fueled concerns that this change could weaken Mexico's standing in the 2026 review of the US-Mexico-Canada free trade agreement (USMCA), as the US and Canada may see the exit of independent regulators as a risk to their business interests in Mexico. Sheinbaum said she met with US president Joe Biden and Canadian president Justin Trudeau during the G20 summit and discussed the importance of the USMCA. She did not mention any concerns the trade partners had regarding the bill. Morena previously tried to absorb the independent regulators early on during the previous administration. The ruling party saw its efforts strained because it lacked the two-thirds supermajority required to pass constitutional changes. Morena and its allies are now expected to secure the votes swiftly, as they have passed other constitutional reforms in the previous weeks. By Cas Biekmann Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Tupras agrees more than 500kt 2025 bitumen tender sales


24/11/20
24/11/20

Tupras agrees more than 500kt 2025 bitumen tender sales

London, 20 November (Argus) — Turkish refiner Tupras has agreed 2025 annual tender sales totalling well over 500,000t of bitumen from its Izmit and Izmir refineries to leading international trading and supply firms. Market participants involved in the process said Rubis Asphalt and Continental Bitumen — the bitumen trading and supply unit of French construction firm Colas — had each won undisclosed volumes, with Colas taking fob and delivered (CFR) supplies. Vitol was also understood but not confirmed to have won fob volumes, with the firm a regular lifter of large cargoes at Izmit and/or Izmir for supply mainly into its Antwerp bitumen terminal in Belgium, including a cargo moved on Vitol's 36,962dwt tanker Asphalt Splendor last month. While in excess of 500,000t of fob volumes are understood to have been agreed for Tupras supply to lifters next year, tender process participants said a further seven to eight cargoes — each around 12,000t — had also been agreed for supply to Continental Bitumen on a CFR basis. The 14,786dwt Tupras bitumen tanker T Adalyn is to move those cargoes, as it has done in a similar arrangement with Continental Bitumen under the Turkish firm's 2024 tender arrangements, with the tanker delivering Tupras cargoes this year into Colas import terminals in France, Ireland and the UK, and on some occasions into other northwest European locations. Tupras tender participants said that at least some of the 2025 fob volumes had been awarded at double-digit fob discounts to fob Mediterranean high-sulphur fuel oil (HSFO) cargoes following similar indications from some tender buyers late last year regarding the 2024 Tupras tender. Such values had rarely been seen under Turkish term supply deals before this year, with the persistently weak outlook for European bitumen supply-demand fundamentals lasting into 2025 under current projections. Tupras could benefit next year from any shortfall in bitumen availability from its nearest competitor Motor Oil Hellas (MOH), which said last month that repair work on one of two crude distillation units (CDU) at its 180,000 b/d Agioi Theodoroi refinery in Corinth, Greece, will take until the third quarter of 2025 to complete after damage caused by a fire on 17 September. While the bitumen market impact of the CDU halt has been limited thus far, there could be a greater effect on Mediterranean availability next year, especially during the peak road paving and bitumen consuming season from spring to autumn. That could in turn help push up Mediterranean fob spot cargo values well above those agreed under Tupras' 2025 tender. By Keyvan Hedvat Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Baghdad clamps down on 'illegal' oil smuggling to Iran


24/11/20
24/11/20

Baghdad clamps down on 'illegal' oil smuggling to Iran

Singapore, 20 November (Argus) — The Iraqi government is clamping down on the "illegal smuggling" of crude, bitumen and other oil products to Iran. Iraq's foreign affairs ministry has asked Iranian authorities to stop trucks carrying "oil, black oil and other petroleum products" from entering Iran through border crossing areas in Iraq's semi-autonomous Kurdistan region unless the exports are licensed by state-owned Somo, according to a 12 November letter seen by Argus . The movement of bitumen and other oil products across the Haj Omran-Piranshahr border point have already halted because of the new directive, market sources said. "The Parwiz Khan and Bashmakh borders are still exporting bitumen, but if this letter is implemented fully, Iraq's bitumen exports will be disrupted since none of these producers possess a Somo licence," an Iraqi bitumen market participant told Argus . The restrictions are expected to remain in place until further notice, although some market participants expressed doubt about how effective the crackdown will be. The directive will also have a bearing on crude producers in Iraq's Kurdistan region, which have been relying on local sales since a key export pipeline to Turkey was shut last year. Foreign operators operating in Kurdistan said they have been trucking crude to local refineries since the closure, but Argus understands that Kurdish crude is also being smuggled — by truck — across the border to Turkey, Iran and Syria. Iraq's oil ministry said this month that it has secured a commitment from the Kurdistan Regional Government (KRG) to scale back its crude production to "agreed levels" to help bring overall Iraqi output back below its Opec+ production target. Tight supply Participants in Iraq's bitumen market note that the smuggling directive coincides with already tight domestic supply, caused by limited availability of vacuum residue feedstock. Not only are higher margins encouraging Iraqi refineries to blend vacuum residue to produce high-sulphur fuel oil (HSFO), but a prolonged roadblock between Erbil and Sulaymaniyah, which started before the Kurdish election in October, has made it difficult for bitumen producers to transport vacuum residue from refineries to their production units, market participants said. Manifest charges were decreased to $10/t last week to encourage bitumen producers to transport vacuum residue, down from $35/t when the roadblock started. But most Kurdish suppliers have refrained from offering fresh cargoes for export in the past three weeks. A few Indian importers told Argus that it has become increasingly difficult to secure Iraqi bitumen drums because of a lack of offers. Some bitumen suppliers took to the sidelines in the expectation that export values will increase in line with rising Iranian seaborne prices. The limited availability of vacuum residue has boosted production costs for Iraqi bitumen suppliers. Iraqi drums will be offered higher than $340/t fob Bandar Abbas in the coming days, compared with around $322-325/t last week, producers said. One major southern Iraq-based producer has not been offering drummed cargoes since the end of October as the higher production costs have made export prices less competitive for major consumers like India, market participants said. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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