Lone Star in September filed a lawsuit against Carlyle in a Texas state court, alleging the private equity firm breached its contract to jointly pursue the project and asking the court to award it full ownership. The lawsuit also sought unspecified damages.
The project was one of at least nine crude oil export terminals proposed for the U.S. Gulf Coast to load U.S. shale oil onto supertankers that carry around 2 million barrels apiece. Carlyle was competing with projects in the same area proposed by commodities trader Trafigura AG and refiner Phillips 66.
“Interest in Harbor Island remains at an all-time high,” Strawbridge said. The port will continue dredging in the area to make it more attractive to export crude, he said.
Lone Star and Berry did not immediately respond to requests for comment.
The U.S. shale boom has prompted a surge in oil exports, which last week hit 3.25 million barrels per day (bpd) and continued to fuel a race to build new export terminals.
However, only one or two of the proposed projects may get built in coming years, with offshore terminals proposed by pipeline operator Enterprise Products Partners LP and Phillips 66 having the best chance of moving forward, said Sandy Fielden, an energy analyst at financial services company Morningstar.
Investors also have grown wary of global oil demand and have questioned “if the world is ready to absorb that amount of additional exports,” Fielden said.
Carlyle’s project had faced hurdles including a months-long delay after regulators called for a full environmental review. It also faced fierce competition with Trafigura, which launched its project earlier, with an easier path to regulatory approval and fewer objections from environmentalists.
Carlyle earlier this year had been looking to sell a 25% stake in the project with companies that operate U.S. pipelines and storage terminals for $625 million, a source familiar with the matter had said.
Enterprise signed long-term agreements with oil major Chevron Corp that advanced its proposed offshore crude export project near Houston, it said in late July, making it the first to make a final investment decision on a proposed deepwater port.
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3--------------Brazil Awards Power Project Contracts
The Brazilian government awarded contracts for companies to build new power generation installations with combined capacity of 2.98 gigawatts, that will cost about 11.16 billion reais ($2.71 billion) to be built.
According to the power trading chamber CCEE, the new plants, which will need to be operational in six years, will sell energy for an average price of 176 reais per megawatt, a 33% discount over the initial price at the auction.
The final result was much above expected. Analysts had projected total awards of around 800 MW at the auction. France’s Voltalia, Norway’s Statkraft and Brazil’s Eneva are among the winning bidders.
“We have to celebrate. We managed to achieve an amount of projects almost three times what was expected,” said Reive Barros, planning secretary at Brazil’s Energy Ministry.
He said the result guarantees power supplies for the coming years in Brazil, as the economy slowly starts to grow again.
Wind power projects will account for most of the new generation, with 1.04 gigawatts of capacity.
Gas-fired thermal plants will make up 734 megawatts of the new capacity, while solar parks will contribute 530 megawatts.
4---------------EU, China, to Coordinate "Green" Investment
The European Union, China, India and several other countries teamed up to coordinate rules and standards for trillions of dollars of private and public “green” investment needed over decades to prevent irreversible climate change.
The initiative, called the International Platform on Sustainable Finance (IPSF), also involves Argentina, Chile, Canada, Kenya and Morocco - a group responsible for 44% of the world’s GDP and the same amount of carbon dioxide emissions.
Its aim is not to raise money, but to harmonise rules on what is sustainable, or “green” investment, across the world so that private capital can flow into it more freely.
“To deal with climate change Europe can only do so much, because Europe generates only around 9% of emissions,” European Commission Vice President Valdis Dombrovskis told Reuters on the sidelines of International Monetary Fund meetings in Washington where the initiative was launched.
“While public funding will be vital for the transition, it cannot pay the massive bill alone. We also have to tap into private capital to raise the trillions needed,” he said.
“No national budget can pay for that on its own. Nor should it. Countries should link their sustainable financing needs to global financial markets to scale up green investment at the level that the world needs,” he said.
The European Union’s executive arm, the European Commission, in June sought to boost the flow of private money to tackle climate change by publishing guidelines on what qualifies as environmentally friendly investment.
But China and some others also have their own rules on that, which shows the need for a joint initiative to keep them harmonised to avoid market fragmentation, Dombrovskis said.
The European Union has agreed to substantial reductions of carbon emissions by 2030 and the Commission wants the bloc to reduce them to zero by 2050 to help stop global warming, the rise of average worldwide temperatures.
To cut emissions by 2030, many sectors of the economy, such as manufacturing, agriculture and energy, require an extra annual investment of between 180 and 290 billion euros and even more is needed to achieve zero emissions by 2050.
“We need to have the international community on board and that is why we are launching the international platform for sustainable finance to exchange best practices, to coordinate our approach,” Dombrovskis said.
5------Canada LNG Export Plans Progress
Pieridae Energy moved closer to building a liquefied natural gas (LNG) export terminal on Canada’s East Coast after taking ownership of fields from Royal Dutch Shell which will feed gas into the plant, the company said.
The Goldboro LNG terminal would be the first on Canada’s East Coast and compete with the growing number of plants on the U.S. Gulf Coast, hoping its shorter distance to Europe and further west will help sell its LNG by cutting shipping costs.
Pieridae said in a statement it had closed a C$190 million ($145 million) acquisition of Shell’s gas assets in Alberta’s Foothills region, giving it most of the gas needed to supply the first of two plants at the Goldboro terminal.
“We will now complete our negotiations with Kellogg Brown & Root Limited for a fixed price contract to construct the Goldboro LNG facility so that we can then proceed to complete the project financing and final equity raise and make a final investment decision (FID),” Pieridae CEO Alfred Sorensen said.
The Canadian LNG industry has been slower than its U.S. counterpart to take advantage of soaring gas demand around the world and build export plants, in part due to securing feedstock supplies for the terminals.
This contrasts to the U.S. Gulf Coast, where there is so much gas being produced thanks to the shale revolution, some producers have had to pay buyers to take it off their hands. This makes it easier for LNG projects there, which tend to buy gas rather than own gas assets.
Five large LNG export terminals operate in the United States including the 25 million tonne a year (mtpa) Sabine Pass, operated by Cheniere Energy. By contrast, there are no operating LNG export facilities in Canada although Shell has begun constructing a massive one on the West Coast.
Unusually for LNG projects in the developed world, Pieridae has a $4.5 billion German government guarantee and has one German buyer, Uniper, for all 5 million tonnes a year produced by its first train, a large contract by industry standards.
Pieridae said the Shell deal allows it to begin to leverage a $1.5 billion of the German government guarantee for the upstream gas production part of its project. The rest of the guarantee applies to the construction of the terminal itself.
Germany, as yet, has no facilities to import LNG but three import terminals have been proposed, including in Wilhelmshaven, a project owned by Uniper Global Commodities.
Europe’s gas production is expected to fall in future years with the shutdown of the huge Dutch Groningen gas field and the gradual depletion of reserves in the North Sea.
As part of Germany’s involvement in the project, 1.5 million tonnes of LNG sold to Uniper must land in the Netherlands and the subsequent regasified gas shipped to Germany by pipeline, Pieridae’s corporate documents showed.
6----------------Germany Awards Onshore Wind Power, Solar Licences
Germany’s power network agency said it had awarded licences to build onshore wind turbines with the capacity to produce 204 megawatts (MW), after its Oct. 1 auction, aiming for a possible maximum of 675 MW, was again undersubscribed.
The Bundesnetzagentur energy markets regulator also said in its statement that it had awarded 153 MW of solar power capacity out of a tender volume of 648 MW, with nearly all permits going to Bavarian bidders.
The authority has warned that a sharp fall in applications for green power projects threatens the country’s energy transformation. The economy ministry this month presented a schedule to reverse the lull.
Developers have shied away from bidding in the last two years, saying that what they called an unreliable political framework was deterring companies and equipment makers.
The planning and permissioning of applications, especially for wind turbines, is often lengthened as local citizens agitate to stop the construction of new infrastructure. Such action has also slowed related network expansons.
The average price in the October wind auction was 0.62 euro per kilowatt hour (kWh), with most of the 25 permits awarded to bidders in Brandenburg, North Rhine Westphalia and Schleswig-Holstein states, the authority said.
The average price in the solar auction was 0.49 euro per kWh.
The next tender for both technologies will be held jointly on Nov. 1. The next separate tenders are due on Dec. 1.
7-------------Russia Sells Crude at Record Premiums to Asia
Russia, the world’s No. 2 oil producer, has become an unintended beneficiary of U.S. sanctions after an embargo on Chinese ships drove up tanker freight rates, spurring record premiums for Russian crude that takes just days to arrive in North Asia.
Demand for key Russian oil grades sold in Asia has been strong in the past month after an attack on key oil processing facilities in Saudi Arabia drove up prices for spot crude while Asian refiners are processing more low-sulphur grades to meet shippers’ demand for cleaner fuels from 2020.
Soaring freight rates in the past two weeks prompted Asian buyers to bid up for cargoes that ship over shorter distances such as oil from Russia.
These factors pushed spot premiums for December ESPO Blend crude ESPO-DUB, loading from Russia’s Pacific port of Kozmino, to an all-time high of about $9 a barrel to Dubai quotes in two Surgutneftegaz spot tenders.
The spot premium for Russian Sokol crude also jumped to a five-year-high of about $9 a barrel to Dubai quotes as oil major Exxon Mobil Corp sold a December-loading cargo at that level in a spot tender, traders said. Freight rates soared to new highs over the past couple of weeks after nearly 300 oil tankers, or 3% of the global fleet, were placed off limits as companies fear violating U.S. sanctions against Iran and Venezuela.
“Russia’s Urals (crude) has been doing fine this year mostly thanks to sanctions against Iran and Venezuela and now ESPO has clearly benefited. U.S. sanctions really do Russian oil grades good,” a Western trader said.
Although spot premiums for crude have risen across the board, Russian crude grades are being favoured by Asian buyers “mainly due to freight”, said a Chinese trader.
“Short-haul cargoes will be attractive,” he added.
It takes four days to ship a cargo of ESPO crude from Russian’s Kozmino port to China’s Shandong port and three days to Japan’s Chiba port, according to data on Refinitiv Eikon.
The Russian cargoes are expected to head to Japan where refiners will ramp up output during fourth quarter to meet peak winter demand, traders said.
They added that uncertainty over Saudi light crude supplies after the attack is also supporting light crude prices.
Oil production at the world’s top exporter has rebounded back to 11.3 million bpd and was on track to reach 12 million bpd by the end of November, but some traders said it could take longer to repair the crude oil processing plants.
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8----------- Aramco Delays Planned IPO
Saudi Aramco has delayed the planned launch of its initial public offering in hopes that pending third-quarter results will bolster investor confidence in the world’s largest oil firm, two sources familiar with the matter said.
Aramco had been expected to announce plans next week to float a 1% to 2% stake on the kingdom’s Tadawul market, in what would have been one of the largest ever public offerings, worth upwards of $20 billion.
However, after a Sept. 14 attack on its Abqaiq and Khurais plants temporarily knocked out half its crude output, the world’s top exporter wants to reassure investors by first presenting results covering the period, the two sources said, speaking on condition of anonymity as the information is not public.
“They want to do all that they can to hit the valuation target. Solid results after the attack will put them in a stronger position,” said one of the sources.
The second source confirmed the offering had been postponed, and there was currently no new date set for the listing. Neither source knew when third quarter results were likely to come out.
In a statement to Reuters, Saudi Aramco said: “The company continues to engage with the shareholders on IPO readiness activities. The company is ready and timing will depend on market conditions and be at a time of the shareholders’ choosing.”
The news comes after Reuters, citing sources familiar with the IPO, reported on Sept. 24 that the offering was unlikely to happen this year in light of the attacks.
The Financial Times, which initially reported the IPO delay, cited a source as saying the listing was delayed by “weeks”.
The prospect of Aramco selling a piece of itself has had Wall Street on tenterhooks since Crown Prince Mohammed bin Salman first flagged it three years ago.
However, his desired $2 trillion valuation has always been questioned by some financiers and industry experts who note that countries have been accelerating efforts to shift away from fossil fuels to curb global warming, putting oil prices under pressure and undermining producers’ equity value.
Then came the September attack, which initially knocked out 5.7 million barrels per day (bpd) of production, or more than 5% of global oil supply.
Aramco halted plans for a blockbuster international listing of around 5% last year amid debate over where to list overseas, but talks resumed this summer.
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9-----Total: 2mb/d Crude Supply Off Market
Oil markets have lost 2 million barrels per day (bpd) of crude supply this year due to security and political issues but are more concerned about slowing demand, a senior executive at French oil and energy group Total said.
The political issues that led to the lost crude supply include U.S. sanctions on Venezuela and Iran, and disruptions in Saudi Arabia and Libya, Thomas Waymel, Total’s president of trading and shipping, said at the International Petroleum and Natural Gas Enterprises Conference in Zhoushan, China.
Saudi Arabia’s crude supply in September fell by 770,000 bpd to 9.02 million bpd, the lowest since 2011, following attacks on state oil giant Saudi Aramco’s facilities on Sept. 14, according to the International Energy Agency.
A series of incidents in the Persian Gulf since May this year, including drone attacks in the Straits of Hormuz, a major shipping artery for oil, has raised tension in the region, while in North Africa, Libya’s largest field had to shut down repeatedly in August due to protests.
But “we can see that the concerns over slowing economy and demand are much more than such unexpected supply disruption,” Waymel said, adding that the impact of U.S.-China trade dispute was also not as big as slowing demand in the market.
10-----PetroChina to Supply Zhoushan Bunker
A PetroChina unit has won a license to supply marine bunker fuel in Zhoushan on China’s east coast, as the city’s free trade zone looks to challenge Singapore as a regional shipping fuel hub, according to a company executive and local government official.
PetroChina Fuel Oil Co. Ltd, a subsidiary of state oil and gas giant PetroChina, will join half a dozen other domestic independent and state-run firms supplying marine fuel from bonded storage, with the permit coming just months before new global rules on cleaner bunker fuel come into force.
Zhoushan, in Zhejiang province, is relying on its proximity to major Chinese ports and support from Beijing to give it an edge over its larger Southeast Asian rival in the multi-billion dollar marine fuel industry.
“We’ll either import the very low sulphur fuel or produce it ourselves,” a senior PetroChina Fuel Oil official told Reuters, declining to be identified as he was not authorised to speak to media.
A local official in Zhoushan with direct knowledge of the matter confirmed the company has received a permit.
PetroChina Fuel Oil has mainly focused on marketing Venezuelan crude lifted by its parent company under term supply contracts, but this business has shrunk dramatically in recent months due to U.S. sanctions on the South American oil exporter.
The firm operates four small refineries in China that process primarily Venezuela’s Merey crude, a heavy type of oil that typically yields bitumen used in road construction.
It would need to revamp its facilities in order to make the 0.5% sulphur fuel oil required under International Maritime Organization rules that come into effect from January 2020, said a bunker fuel executive based in Zhoushan with a different firm.
Zhoushan, approved by Beijing in early 2017 as a pilot zone for a regional commodities trading hub, is China’s largest supplier of bonded marine fuel by port.
Zhoushan’s bonded bunker fuel sales are expected to reach 4 million tonnes this year and to exceed 5 million tonnes in 2020, Feng Fei, vice governor of Zhejiang province told an industry gathering in Zhoushan.
That is is still less than a tenth of Singapore’s annual shipping fuel sales, although a bunker executive with China’s top refiner Sinopec has previously forecast that marine fuel turnover at Zhoushan could reach 30 million tonnes by 2030.