Venezuela's Maduro open to talks with the US
Venezuelan leader Nicolas Maduro plans to talk with US envoys on Wednesday to discuss allowing the South American country to increase oil exports in exchange for free and fair elections, he said late on Monday.
But Maduro's call for dialogue comes less than a month before the 28 July election in which polls show him up to 40 percentage points behind his main challenger. It is also after the US rescinded a six-month reprieve on sanctions in April, accusing Venezuela of violating a commitment to hold a fair vote.
Maduro said that the US had sought dialogue with him "for two months in a row", and, "after thinking about it, I have accepted".
The head of the pro-Maduro assembly elected in 2020, Jorge Rodriguez, will represent him in the talks, Maduro said.
The US State Department declined to directly confirm Maduro's statement but said that the US welcomed "dialogue in good faith, and we support the Venezuelan people's desire for competitive and inclusive elections on July 28."
The US ties sanctions relief to Maduro's observing the 2023 Barbados agreement with the Venezuelan opposition, which promised to hold a competitive presidential election.
The US in April reimposed sanctions against Venezuela because the Maduro government did not allow the main opposition contender, Maria Corina Machado, to run for president. Former Venezuelan diplomat Edmundo Gonzalez is the sole presidential candidate representing the opposition Unitary Platform.
"We are clear-eyed that democratic change will not be easy, and certainly requires a serious commitment," the US State Department said. "This is something that we will continue to focus on when we will engage in dialogue with with a broad range of Venezuelan actors."
Venezuela in recent weeks has barred an additional 10 city mayors from running for office for 15 years after they expressed support for Gonzalez, according to the CNE electoral authority and the comptroller general's office.
During the first six months of 2024 Maduro has arrested 39 people connected to Gonzalez's campaign, the last one as recently as 30 June, a campaign source told Argus, using figures from Venezuelan non-governmental organizations. Police over the weekend also detained Machado for several hours while leaving a rally for Gonzalez.
Venezuela's oil output increased by around 4pc in May to 911,700 b/d from 878,000 b/d in April as drilling campaigns showed results after three months of flat production, according to the oil ministry. But US sanctions are expected to keep a cap on much additional growth.
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Prompt European gasoline forward curve in contango
Prompt European gasoline forward curve in contango
London, 2 July (Argus) — Prompt Eurobob gasoline time spreads have entered a contango structure — where prompt values are at a discount to forward prices — signalling the weakest structure for the time of year since the pandemic year of 2020. July Eurobob swaps were at a 75¢/t discount to August swaps at the close on 1 July. The spread had been in a relatively shallow backwardation — when prompt prices are at a premium to later dates — in recent sessions, although it has been narrowing steadily from $6.50/t on 1 June. It is uncommon for the forward structure to be in contango at this time of year. In the corresponding session last year the July swap was at a $19/t premium to the August swap, and since 2009 the current scenario has occurred only twice — in 2020 when much of Europe was under Covid-19 lockdown measures, and in 2016 when the front of the curve was pressured by high European inventories and high US supply. The contango structure reached $5.50/t on both occasions. The recent move builds on weakness exhibited last month , when the front of the forward curve between June and July moved into contango, a structure which was maintained through the rest of June. Demand for gasoline has failed to meet traders' expectations this European summer. Stock levels have been robust, particularly in the US where high refinery utilisation rates have boosted supply and stifled the requirement for European product. This was shown in gasoline crack spreads to North Sea Dated crude in June , which moved sharply lower — counter-seasonally — to an average of $14.87/bl, $5.83/bl lower than in May and down by $9.68/bl compared with year ago. There are already signs of this reversing however. In early trading today the front of the forward curve strengthened, with July marked at parity to August, according to brokers. Discounts in the spot barge market at the Amsterdam-Rotterdam-Antwerp (ARA) hub have narrowed relative to August Eurobob swaps today, indicating firmer demand, with participants saying there is a more workable transatlantic arbitrage. By Jonah Sweeney Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Petroecuador expects more crude with fewer wells
Petroecuador expects more crude with fewer wells
Quito, 1 July (Argus) — State-owned oil company Petroecuador will drill fewer wells this year than first planned but still expects to produce 5,000 b/d more crude than initially forecast for 2024, according to the work plan of interim chief executive Diego Guerrero. Petroecuador plans to drill 90 wells this year, including 27 drilled through May and 63 planned for the rest of the year — well below the 156 wells initially forecast under former chief executive Marcela Reinoso , who resigned in May. But the company expects crude output to average 390,000 b/d by December, according to Guerrero's plans, higher than the 370,000 b/d estimate made before he took office, and up from 369,000 b/d reported for June. Ecuador is expected to lose about 50,000 b/d come 1 September when it shuts down the Ishpingo, Tambococha and Tiputini (ITT) fields in block 43 after Ecuadorians voted to end oil activities in the environmentally sensitive region. Guerrero's plan did not break out how much output it expects from ITT this year. Petroecuador did not respond to a request for comment. Reinoso told the national assembly in February that without ITT, Petroecuador's production would fall to 358,500 b/d in September before rising again to 373,300 b/d in December, leading to a 2024 average of about 385,000 b/d. But petroleum engineers' association vice-president Fernando Reyes said that both the new and old goals for December production are too optimistic without ITT. After a 50,000 b/d drop with the end of ITT production, Reyes believes under a best-case scenario new drilling could add 20,000–30,000 b/d of production, bringing December output to 360,000-370,000 b/d. But Guerrero's higher projections are feasible if Petroecuador keeps pumping crude from ITT, Reyes said. Ecuadorian president Daniel Noboa in January proposed a one-year delay on plans to end drilling in the ITT, but the plan has not advanced. Guerrero's work plan also includes new projects to recover associated gas from the Sacha Norte 2, Sacha Central, Drago and Shushufindi fields, and also workovers in four wells in the offshore Amistad natural gas field. Petroecuador produced 81pc of Ecuador's crude output of 484,499 b/d in May. By Alberto Araujo Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Shale to emerge leaner from M&A boom
Shale to emerge leaner from M&A boom
New York, 1 July (Argus) — The recent flurry of deals in the US shale patch is poised to deliver significant productivity gains, potentially offsetting a drilling slowdown and suggesting that it might well be a mistake to bet against the sector any time soon. Ownership of top shale basins, such as the Permian in west Texas and New Mexico, is increasingly falling into the hands of fewer but larger operators, with the necessary resources to chase technology breakthroughs and drive economies of scale that could support further output growth. The flood of deal-making comes as shale growth is likely to slow after defying all expectations last year. Even as acquirers look to fine-tune their combined portfolios and slow activity in favour of shareholder returns, they will still be targeting ever longer lateral wells that reduce the need for more rigs and hydraulic fracturing (fracking) crews. Fracking multiple wells at the same time and shifting to electric fleets will also help them become more efficient. All in all, shale could continue to be a thorn in Opec's side for years to come. Underestimate US shale at your peril was the title of a recent report from analysts at bank HSBC. "We expect the mergers and acquisitions to result in substantial capital efficiencies," they wrote. Concentrated operations have reduced inefficiencies in the supply chain, and the elimination of downtime has also helped producers become leaner, according to consultancy Wood Mackenzie. But costs remain 15-30pc higher than 2020-21 levels, suggesting scope for further improvements. And while efficiency gains will inevitably become exhausted at some point, opportunities to tackle unproductive processes might still crop up. "The will and the technology are there for some operators, who should be able to keep cutting capex while modestly growing and maintaining shareholder distributions for a while to come," Wood Mackenzie research director for the Lower 48 Maria Peacock says. ExxonMobil flagged $2bn in annual savings from its $64.5bn takeover of shale giant Pioneer, with two-thirds to come from improved resource recovery and the rest from efficiencies. Leading US independent ConocoPhillips says improved technology will help it extend its inventory of top-quality drilling locations in both the Eagle Ford and Bakken basins after its $22.5bn tie-up with Marathon Oil. Return to spender Productivity gains are hardly the preserve of firms that have been active participants in the $200bn of shale deals seen over the past year. For example, US independent EOG, which has sat out the mergers and acquisitions (M&A) boom so far, plans to deliver the same level of growth for this year as seen in 2023 with four fewer rigs and two fewer fracking fleets. "Technology has evolved so much that you can go and drill horizontal wells in these and exploit that technology and you can get just absolutely outstanding returns," chief operating officer Jeff Leitzell says. Still, almost half of oil and gas executives recently polled by the Dallas Federal Reserve think that US oil output will be "slightly lower" if consolidation continues over the next five years. But the answer differed by company size. All executives from E&P firms that produce 100,000 b/d or more envisaged "no impact". Service company executives are more concerned: "Consolidation by E&P firms has curtailed investment in exploration," one said. "Our hope is that it's a temporary situation that will work itself out as the integration is completed." And even though the prolific Permian basin is due to peak before the end of the decade, analysts forecast robust growth in the intervening years. Relatively high oil prices that remain above breakeven costs and efficiency gains — which will shift the mix of wells to newer and more productive ones — will be the main drivers, according to bank Goldman Sachs. By Stephen Cunningham US tight oil production Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Supreme Court ends 'deference' to regulators
US Supreme Court ends 'deference' to regulators
Washington, 28 June (Argus) — The US Supreme Court's conservative majority, in one of its most significant rulings in years, has thrown out a landmark, 40-year-old precedent under which courts have offered federal agencies significant leeway in deciding how to regulate the energy sector and other industries. In a 6-3 ruling that marks a major blow to President Joe Biden's administration, the court's conservatives overturned its 1984 ruling Chevron v. NRDC that for decades has served as a cornerstone for how judges should review the legality of federal regulations when a statute is not clear. But chief justice John Roberts, writing for the majority, said experience has shown the precedent is "unworkable" and became an "impediment, rather than an aid" for courts to analyze what a specific law requires. "All that remains of Chevron is a decaying husk with bold pretensions," the opinion said. For decades, under what is now known as Chevron deference, courts were first required to review if a law was clear and if not, to defer to an agency's interpretation so long as the government's reading was reasonable. But the court's majority said the landmark precedent has become a source of unpredictability, allowing any ambiguity in a law to be a "license authorizing an agency to change positions as much as it likes." Roberts wrote that the federal courts can no longer defer to an agency's interpretation "simply because" a law is ambiguous. "Chevron is overruled," Roberts writes. "Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority." The court's ruling, named Loper Bright Enterprises v. Gina Raimando, focuses on lawsuits from herring fishers who opposed a rule that could require them to pay about $710 per day for an at-sea observer to verify compliance with regional catch limits. The US Commerce Department said it believes it interpreted the law correctly, but the fishers said the "best interpretation" of the statute was that it did not apply to herring fishers. The court's three liberal justices dissented from the ruling, which they said will likely result in "large-scale disruptions" by putting federal judges in the position of having to rule on the merits of a variety of scientific and technical judgments, without the benefit of expertise that regulators have developed over the course of decades. Overturning Chevron will put courts "at the apex" of policy decisions on every conceivable topic, including climate change, health care, finance, transportation, artificial intelligence and other issues where courts lack specific expertise, judge Elena Kagan wrote. "In every sphere of current or future federal regulations, expect courts from now on to play a commanding role," Kagan wrote. The Supreme Court for years has been chipping away at the importance of Chevron deference, such as a 2022 ruling where it created the "major questions doctrine" to invalidate a greenhouse gas emission rule limits for power plants. That doctrine attempts to prohibit agencies from resolving issues that have "vast economic and political significance" without clear direction from the US Congress. That has led regulators to be hesitant in relying on Chevron to defend their regulations in court. The Supreme Court last cited the precedent in 2016. The ruling comes a day after the Supreme Court's conservatives, in another 6-3 ruling , dramatically curtailed the ability of the US Securities and Exchange Commission — and likely many other federal agencies — to use in-house tribunals to impose civil penalties. The court ruled those enforcement cases instead need to be filed as jury trials. That change is expected to curtail enforcement of securities fraud, since court cases are more resource-intensive. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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