Colombia reassures oil producers after Davos vow

: Crude oil
23/01/23

Colombia's energy minister downplayed the chances of cancelling existing oil exploration and production contracts after reaffirming the country's commitment to not award new ones at the World Economic Forum in Davos, Switzerland.

"We have not talked about ending contracts for the exploration and production of oil and gas," energy minister Irene Velez said on social media yesterday. "But Colombia is heading towards the transition to produce cleaner energy."

Velez on 20 January in Davos had insisted that the country will no longer award any new E&P contracts for natural gas or oil as part of a shift in policy after President Gustavo Petro took office in August.

"This is of course very controversial at the national level," she said. "But for us it is a clear signal of our commitment to fight climate change."

The administration is banking on tourism and development cleaner energy to fill the gap in revenues that this would cause.

Petro and Velez have reiterated often that Colombia will not grant new oil, natural gas or coal contracts as part of their plan to transition to renewable energy. But finance minister Jose Antonio Ocampo said two months ago that the government could reconsider its position. The ministries of finance, mines and energy, state-controlled oil company Ecopetrol and the ANH are weighing the issue.

Yesterday, public credit director Jose Roberto Acosta denied that Colombia will stop signing new oil and gas contracts.

The government has made several contradictory statements on the issue. In August Velez stressed the importance of ensuring energy security at a meeting with natural gas industry leaders, appearing to pull back from earlier comments signaling the country may turn to gas imports from neighboring Venezuela if it were unable to meet domestic demand.

Colombia emits an average 237mn t/yr of total GHG emissions, or just 0.46pc of the global total, partly thanks to extensive hydroelectric generation.

Colombia will need to add 250mn bl/yr of oil reserves to stave off a rapid decline in oil production, former hydrocarbon's director Julio Cesar Vera said. The country produces about 757,00 b/d.

By Diana Delgado

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

24/11/28

Opec+ meeting delayed to 5 December

Dubai, 28 November (Argus) — A meeting of Opec+ ministers scheduled for 1 December has been postponed to 5 December. Opec said the delay is because of a conflicting travel schedule for energy ministers of Mideast Gulf countries, as the Gulf Co-operation Council (GCC) leaders summit in Kuwait overlaps with the Opec+ meeting. The Opec+ meeting, which was to be held online, will coincide with a decision to be taken by eight member countries on whether to press ahead with a plan to begin the phased return of 2.2mn b/d of "voluntary" production cuts to the market from January. This was to begin in October, but concerns about the strength of oil demand and price weakness prompted the group to postpone to December and then to January. The UAE will start increasing its output from January regardless, as a 300,000 b/d increase to its official production quota kicks in over the course of 2025. Any increase to Opec+ supply would be tempered by additional cuts that some of the eight will be making in the coming months to compensate for past overproduction. Iraq, Kazakhstan and Russia are the group's leading overproducers. Saudi energy minister Prince Abdulaziz bin Salman on 27 November talked with Kazakhstan's energy minister Almasadam Satkaliyev and Russia's deputy prime minister Alexander Novak, Moscow's point man on Opec+ matters. A day earlier, Prince Abdulaziz met in Baghdad with Iraq's prime minister Mohammed Shia al-Sudani and Novak. The statements from both meetings emphasised "full adherence to the [current policy] agreement, including the voluntary production cuts agreed upon by the eight participating countries, as well as compensating for any excess production." The 5 December meeting will be a third consecutive Opec+ ordinary ministerial meeting to be held virtually rather than in Vienna. The last time Opec+ held its ministerial meeting in-person was in June 2023. By Bachar Halabi and Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US refiners cannot readily replace Canadian oil: AFPM

24/11/27

US refiners cannot readily replace Canadian oil: AFPM

Calgary, 27 November (Argus) — US refiners that process Canadian crude would not easily find alternative supplies if president-elect Donald Trump follows through on his tariff plans, potentially threatening the viability of some fuel producers, a US refining industry group warned today. Trump on Monday said he would impose a 25pc tariff on imports of all goods from Canada and Mexico, claiming those two countries need to tighten borders they share with the US. Such tariffs would be problematic for US refiners that have come to rely on a steady diet of Canadian crude, much of which comes from the western, oil-rich province of Alberta. "There is no easy, fit-for-purpose replacement for this crude oil," the American Fuel and Petrochemical Manufacturers (AFPM), which advocates for many US refiners, said on Wednesday. Canadian oil is the number one refinery feedstock in the US midcontinent, accounting for 65pc of all crude runs in the region, according to AFPM. Refiners in the region have limited connectivity to US crude and refined products pipelines, so tariffs could sharply increase operating costs and even threaten their viability, the association said. Many refineries were built prior to the US shale boom and are suited for heavier, high-sulfur crudes that typically come from foreign sources. Canada exported about $428bn in goods and services to the US in 2022, while the US exported $481bn to Canada, according to US data. Petroleum makes up a substantial part of Canada's exports, with roughly 4mn b/d of Canada's 5mn b/d of production shipped to the US. Of this, about 3mn b/d is destined for the US midcontinent region. "The crude oil pipeline logistics have changed over the decades such that the loss of Canadian oil into these regions can only be replaced with domestic production," Lipow Oil Associates president and industry analyst Andrew Lipow told Argus Wednesday. "Unfortunately, there is very little pipeline capacity to deliver crude oil produced in Texas and New Mexico to refineries in Montana, Minnesota, and Chicagoland." Lipow suggested three scenarios, or some combination thereof, may unfold: Canadian crude would need to be further discounted to overcome the tariff; US refiners would pay more for crude, including for domestic WTI that would rise to import parity; or Canadian crude would be exempted from tariffs and there would be no change. "The extent of the price impact depends on one's locations, but certainly seems to me that the consumer will be paying more for energy," Lipow said. Tariffs on crude and refined products "will not help our industry compete, nor will they support US energy dominance and affordability for consumers", AFPM said. The American Petroleum Institute (API), another industry group, agreed. "Maintaining the free flow of energy products across our borders is critical for North American energy security and US consumers," an API spokesperson said. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Traders expect Opec+ to delay output increase

24/11/26

Traders expect Opec+ to delay output increase

London, 26 November (Argus) — Vitol, Trafigura and Gunvor representatives today suggested that Opec+ members would probably continue to delay their plan to start increasing crude production. The comments from three of the world's biggest trading firms come just days before the Opec+ alliance is set to hold a ministerial meeting on 1 December to decide its output policy for next year. At the top of the agenda is whether eight members will begin returning 2.2mn b/d of "voluntary" production cuts over a 12-month period starting in January — three months later than originally planned. "I think there's no room for them to increase," Gunvor chief executive Torbjorn Tornqvist said at the Energy Intelligence Forum in London today. "So far they've been very disciplined and they've made the right call not to add any oil," he said. Most forecasters predict weak oil demand next year, with the market flipping into a surplus. "I suspect that the barrels coming back will again be deferred," Trafigura's global head of oil Ben Luckock said. "Exactly how long? Probably not that far, but they have the choice to be able to continue to [delay] and they probably don't enjoy the price right now." The front-month Ice Brent crude futures is currently trading around $73/bl, around $20/bl below where prices were before Opec+ announced its initial output cut in October 2022. The alliance has reduced output by about 4mn b/d since then, Argus estimates. "The likelihood is that Opec will try to manage the market through the next two to three months to wait to see how some of these geopolitical aspects solve themselves," Vitol chief executive Russell Hardy said. All three executives pointed to geopolitical uncertainties such as the incoming US administration's Iran sanctions policy, the trajectory of the Ukraine-Russia war and the conflict in the Middle East as potential market movers in 2025. Luckock also stressed the importance of compliance for the Opec+ alliance. "I think compliance is a huge deal, because a cheating Opec doesn't yield higher prices." Members including Iraq, Kazakhstan and Russia have tended to exceed their production targets this year, tarnishing the credibility of the alliance. But a long-running Saudi-led effort to get these countries to comply and compensate appears to be bearing fruit. The three executives also gave their traditional forecasts for what the oil price would be in 12 months. Tornqvist said he expected prices to be similar to today's levels at $70/bl, which he described as "fair" given the world's large spare production capacity and declining production costs. Luckock said it was a "mug's game" forecasting 12-months out, particularly given the range of geopolitical uncertainties on the horizon. When pressed for a number he settled on $75/bl, but said this was not particularly useful to anyone. Hardy stuck with his previous forecast of $70-80/bl. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Trump tariffs will divert TMX crude from USWC

24/11/26

Trump tariffs will divert TMX crude from USWC

Houston, 26 November (Argus) — President-elect Donald Trump's plans to impose tariffs on imports from Canada could divert most of the crude exported via the 590,000 b/d Trans Mountain Expansion (TMX) pipeline away from US west coast refiners to Asia-Pacific. Flows from Canada's newest pipeline might shift after Trump, via social media late on Monday, announced plans to slap a 25pc tariff on all imports from Mexico and Canada. TMX, which expanded capacity on the Trans Mountain system to 890,000 b/d and gave Asia-Pacific buyers access to heavy sour crude produced in Alberta's oil sands, would have to direct all its flows to Asia if US west coast demand weakens. Tariffs on crude imports from Canada would force US west coast refiners to turn elsewhere. Refiners in the region have increased purchases of Canadian grades since the May commencement of the pipeline. Cheaper prices and closer proximity to Vancouver, where TMX crude loads, allowed the heavy sour crudes to find favor along the US west coast. But the proposed tariffs would strengthen TMX prices, no longer making it the cheapest heavy sour option. About 313,000 b/d of mostly heavy sour Canadian crude has loaded at Vancouver's Westridge terminal in the six months since the pipeline made its debut, according to analytics firm Vortexa. US west coast refiners received around 145,000 b/d since the pipeline came on line in May, up from less than 40,000 b/d a year earlier. Most TMX crude destined for the US west coast has gone to California refiners, with Marathon, Chevron and Phillips 66 emerging as consistent buyers. Around 34mn bl of TMX crude has loaded for Asia-Pacific, or about 161,000 b/d. China, the largest buyer in Asia-Pacific, has purchased about 83pc of those barrels, Vortexa data shows. Also, Latin American barrels could see a resurgence after being displaced by TMX in the region. Latin American medium and heavy sours, like Napo and Oriente, could see a resurgence in demand as well, after TMX displaced those grades. In the first six months after TMX, imports of Napo and Oriente fell by 14pc. Brazilian and Guyanese crudes could also see higher demand in the region, according to market participants. But Mexican crude flows could also be limited by Trump's tariffs. Imports from Mexico have been declining since TMX's May commencement, dropping 65pc in the pipeline's first six months of service. But refiners still import the grades, taking roughly 3.5mn bl, or 16,7000 b/d since the pipeline began operating. By Rachel McGuire Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Nigeria restarts Port Harcourt refinery: Update

24/11/26

Nigeria restarts Port Harcourt refinery: Update

Recasts and adds details throughout London, 26 November (Argus) — Nigeria's state-owned NNPC said today it has restarted its 210,000 b/d Port Harcourt refinery after three and a half years offline. Product loadings began today after the plant's smaller, 60,000 b/d capacity crude distillation unit (CDU) came into operation. This gradual restart had been planned by Italian engineering firm Maire Tecnimont, which has been rehabilitating the plant under a $1.5bn contract, although a number of deadlines announced by NNPC have been missed. Refined products from Port Harcourt will add to the gasoline that has been supplied since September from the 650,000 b/d Dangote refinery. Product imports are likely to fall, an industry source said. Nigerian downstream regulator NMDPRA's head Farouk Ahmed said products from Port Harcourt will be made available nationwide and would stoke price competition. Nigeria's National Bureau of Statistics (NBS) reported an average national gasoline price of 1,185/litre (70¢/l) for October, a rise of 88pc on the year and 15pc from September. The price of diesel, which has been deregulated since 2003, was an average N1,441/l in October, NBS said, up by 43pc on the year and by 2pc on the month. The Dangote Group dropped its ex-gantry gasoline prices on Sunday, 24 November, to N970/l from N990/l. Nigerian importers already appear under pressure to compete with Dangote on product pricing, which the Port Harcourt start-up may exacerbate. A local trader said he has found gasoline trading economics most workable when lifting from Dangote ex-single point mooring (SPM) and delivering to coastal ports such as Port Harcourt and Warri in Nigeria's southeast, where truck deliveries from Dangote would prove uneconomic. Nigeria's presidency and NMDPRA's Ahmed urged NNPC to now bring back online its 125,000 b/d Warri and 110,000 b/d Kaduna refineries, which have been closed since 2019. NNPC has opened a combined tender for operating and maintaining these. The outcome of a similar tender for Port Harcourt is unclear. Nigeria would become a net products exporter when Warri and Kaduna come online, NMDPRA's Ahmed said today. A source at the regulator said exports might become vital to Nigerian refiners. "The patronage for petroleum products is low and Nigeria is oversupplied," the source said, attributing the latest Dangote price cut to competition with imports and weak demand. The prospect of Port Harcourt running at its nameplate capacity is in doubt, sources said. It would at best reach 40-50pc of capacity, the industry source said, which would focus on mainly local gasoline deliveries. Port Harcourt was shut in 2020 after several years of low capacity utilisation. NNPC previously said it expects the initial 60,000 b/d phase to produce 12,000 b/d of gasoline, 13,000 b/d of diesel, 8,600 b/d of kerosine, 19,000 b/d of fuel oil and 850 b/d of LPG in the first year of resumed operations. By Adebiyi Olusolape and George Maher-Bonnett Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more