August 2021, Vol. 248, No. 8

Global News

Global News August 2021

European Bank Halts Upstream Investments, Maintains Midstream  

The European Bank for Reconstruction and Development (EBRD) said it will stop investing in upstream oil and gas projects as part of plans to align its activities with the goals of the Paris Agreement on climate change by the end of 2022.  

The lender’s board of governors approved the decision to align with the Paris accord during a meeting on its 30th anniversary. EBRD Managing Director Harry Boyd-Carpenter said this meant the bank was ceasing investment in oil and gas exploration and production.  

“We will no longer invest in upstream oil and gas projects,” Boyd-Carpenter said, though did not specify whether this applied to new or existing investment, or when the prohibition would come into force.   

“However, we will continue to finance select projects in the midstream and downstream sectors but only where those projects are aligned with, and significantly contribute to, the goals of the Paris Agreement,” he told Reuters.  

The announcement follows a pledge last year by the lender, which is majority owned by the G7 major economic powers, to raise the share of green investments in its investment activities to more than 50% by 2025.  

Many of the 38 economies that the EBRD invests in, ranging from Estonia and Egypt to Morocco and Mongolia, are heavily dependent on fossil fuels.  

“Holding the increase in the global average temperature to well below 2° C is a global imperative to safeguard our planet and protect ourselves from climate-related risks,” said EBRD President Odile Renaud-Basso. 

Congress Reverses Trump Rollbacks of Methane Rules  

The U.S. House of Representatives voted 229-191 to nullify the Trump administration’s 2020 rollback of regulations to curb the emissions of greenhouse gas methane from oil and gas infrastructure, following a similar move by the Senate in April.  

The House passed a resolution under the Congressional Review Act (CRA), a 1996 law that allows Congress to reverse federal rules implemented in the last days of a past administration with a simple majority, restoring Obama-era methane regulations that govern oil production and processing.  

Both the House and Senate passed the resolutions with some bipartisan support.  

The CRA comes after the release of a major United Nations report that called for deep cuts in methane emissions to slow the rate of global warming and keep it beneath a threshold agreed by world leaders and found that methane emissions worldwide were vastly underestimated.  

PipeChina Aims for Peak  
Carbon Emissions Before 2030  

China Oil and Gas Pipeline Network, or PipeChina, aims to bring its carbon emission and energy consumption to a peak before 2030, a company manager said.  

The target follows China’s pledge for peak national CO2 emissions by 2030, as it aims to become carbon neutral before 2060. China has not revealed absolute carbon emissions, but analysts estimate they could have exceeded 11.5 billion tons of CO2 equivalent in 2019.  

“In the next step, we will optimize our energy consumption structure and purchase more electricity that is generated from renewable sources through market trading,” Tang Shanhua, the firm’s deputy general manager of business operations, said at an industrial summit.  

Tang added that PipeChina plans to build more natural gas pipelines and natural gas storage facilities in China from 2021 to 2025, while looking into new businesses, such as hydrogen storage and transport and carbon capture and storage.   

Gazprom’s Amur Gas Processing Plant Nearing Completion  

Gazprom’s Amur Gas Processing Plant project is more than 75% complete following its commissioning ceremony for the first production train, the company announced.  

The gas processing plant, located near the town of Svobodny, in the Amur Region of Russia, will initially receive multi-component gas supply via the Power of Siberia pipeline from the Chayandinskoye field (Yakutia) and will later receive gas from the Kovyktinskoye field (Irkutsk Region).  

Operating at full capacity, the Amur plant will produce 2.4 million tons of ethane, 1.5 million tons of LPG and 200,000 tons of pentane-hexane fraction. The primary consumer of the plant’s ethane and LPG production will be the Amur Gas Chemical Complex, a joint project of SIBUR and Sinopec.  

Nigerian Lawmakers  
Pass Historic Oil Overhaul Bill  

Both chambers of Nigeria’s parliament have passed a bill that overhauls nearly every aspect of the country’s oil and gas production, moving changes that have been 20 years in the making one step closer to presidential sign-off.  

Legislators have been hashing out details of the bill since President Muhammadu Buhari presented an initial version in September last year, and the chambers had been expected to vote clause by clause on the more than 400-page long report, but instead quickly voted on the full package.  

The proposal includes a string of changes sought by oil majors, including amended royalties and fiscal terms for oil and gas production, and the transfer of state oil company NNPC’s assets and liabilities to a limited liability corporation created by the bill.  

Leaders agreed earlier this year to sweeten the terms for oil companies in an effort to attract much-needed investment in an era of shrinking global cash for fossil fuel production.  

Police Detain China Gas Unit Employees after Pipeline Blast  

Eight employees at a China Gas Holdings unit were detained by local police following a fatal gas pipeline explosion, according to a statement by the Shiyan city government.  

“The safety management system at the company was not rigorous ... and the company did not strictly comply with the rules of pipeline inspections. There were serious faults in the operation of related facilities,” the statement said, adding that the incident continues to be investigated.  

The blast, which killed 25 people and injured 138, occurred in a residential area and destroyed a food market building.  

The unit, Shiyan Dongfeng Zhongran City Gas Development Co, is one of the gas suppliers for the city which is located in Hubei province. 

Saudi Aramco Seeks Financing Advisor for Gas Pipeline Deal  

Saudi Aramco has invited banks to pitch for an advisory role to help finance the sale of a significant minority stake in its gas pipelines, the oil giant’s second major midstream deal after a $12.4 billion deal for oil pipelines, according to a Reuters report quoting three unnamed sources.  

The gas pipeline stake sale will be a “copy paste” of the oil pipeline deal, one of the sources said.  

Aramco has used a lease and lease-back agreement to sell a 49% stake of newly formed Aramco Oil Pipelines Co to the buyer and rights to 25 years of tariff payments for oil carried on its pipelines.  

The pipeline deal was backed by nearly $11 billion in debt underwritten by eight banks and subsequently syndicated to an additional 10 banks, two sources told Reuters earlier.  

Aramco’s sale of a minority stake in its oil pipelines for $12.4 billion to a consortium led by EIG Global Energy Partners was its largest deal since a record $29.4 billion initial public offering in late 2019. The deal closed on June 20.  

Ecuador Targets Asia with Crude Exports in Larger Vessels  

Ecuador has begun exporting cargo of one of its flagship crudes, Oriente, aboard a very large crude carriers (VLCC), following an upgrade to a terminal it hopes will help it boost exports to Asia.  

The first shipment of 1.08 million barrels of Oriente aboard the Panama-flagged Gem No. 2 vessel was exported in late June and made possible by the construction of an extension of state oil company Petroecuador’s SOTE pipeline from the Balao port to the nearby Punta Gorda terminal, which is operated by privately-held consortium OCP Ecuador.  

Petrochina agreed to pay a $2 per barrel premium over the indexed price of Oriente crude for the portion exported via Punta Gorda, Petroecuador said.   

Ecuador is hoping the new interconnection will lower its customers’ logistics costs and enable them to load both Oriente and the heavier Napo grades in a single shipment, making the country’s oil more competitive as President Guillermo Lasso seeks to revive a struggling economy. 

Three Workers Killed in Iran Pipeline Gas Leak Blast  

An explosion caused by a gas leak at a pipeline pumping station killed three workers and injured four in southwestern Iran, Iranian state media reported.  

“The accident took place ... due to an explosion caused by a gas leak at the pipeline (pumping) station,” Adnan Ghazi, governor of the nearby town of Shush, told state news agency IRNA.  

Ghazi said three technicians were killed and four other people who were resting in a nearby room were seriously injured, IRNA reported.  

The blast occurred along a pipeline connecting the Cheshmeh Khosh oilfield to the city of Ahvaz, state broadcaster IRIB said.  

Gas Pipeline Explosion Kills  
Two in Collin County, Texas  

An explosion on a natural gas pipeline in Collin County, Texas, near the town of Farmersville, killed two people and injured three, local media reports said.  

Atmos Energy Corp contractors were servicing a gas line in the area northeast of Dallas when the explosion happened, media reported.  

“Technicians continue to work with the fire departments and emergency first responders to monitor the situation and make sure the area is safe,” the company said in an emailed response.   

U.S. Trading Group: Brace for Huge Oil Volatility  

Oil prices are likely to be extremely volatile in the next few years, driven by supply constraints rather than demand as financing for new production evaporates in favor of renewables, U.S.-based Castleton Commodities International said.  

“You could see spikes to even higher than $100 a barrel, even $130, and you could also see it go down to $35 a barrel for periods of time going forward,” William Reed II, CEO of Castleton, told the FT Global Commodities Summit. “The question is what happens first. Peak demand or peak investment?”  

His comments echo those of European rivals who see a return to $100 per barrel oil as a real possibility. Oil has not been above $100 or even $90 a barrel since a sharp downturn in 2014 when the rise of U.S. shale oil convulsed global markets.  

Reed said an immediate decarbonization of the world was risky and not possible. He sees Castleton continuing to focus on natural gas and power markets as demand for these will rise with the energy transition. Picking new investments has become more of a challenge in terms of making sure they meet the returns hurdle and do not become stranded in the transition.  

 

Israel to Exempt Oil Pipeline from Environmental Regulations  

The Israeli National Infrastructure Committee plans to exempt the Europe Asia Pipeline Company (EAPC) from considering an environmental impact survey for its installation in Ashkelon, Israeli newspaper Haaretz reported.  

EAPC, formerly the Eilar-Ashkelon Pipeline, operates three crude oil pipelines and one pipeline for oil products. This includes a 158-mile (254-km) crude oil pipeline linking the Red Sea port of Eilat with the Mediterranean port of Ashkelon, a 122-mile (197-km) crude oil pipeline connecting Ashkelon with the Haifa refinery, an 18-inch/16-inch 22-mile (36-km) crude oil pipeline connecting Ashkelon with the Ashdod refinery, and a 161-mile (260-km) oil products pipeline connecting Ashkelon with Eilat.  

Activist groups are upset by the move to not regulate or require reporting of many of the pipelines’ functions, according to the Haaretz report. The Association of Cities for the Environment called on the committee to require an environmental survey, while EAPC called accusations of increasing environmental incidents “baseless claims.”  

“There has been no change in the company’s activities, and it maintains its installations on a regular basis at a very high level,” Haaretz quoted EAPC as saying. “The allegations of natural deterioration and odor issues is part of the association’s defamation.”