Written by rjs, MarketWatch 666
Here are some more selected news articles for the week ending 20 February 2021. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening or Tueday morning.
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Enbridge raises Line 3 Replacement project costs, touts confidence as protests escalate – Enbridge increased the cost of its large Line 3 Replacement project by nearly $1 billion and touted its confidence in bringing the heavy oil sands system online in late 2021 amid escalating environmental protests and heightened political scrutiny under the new Biden administration. Enbridge said during its Feb. 12 earnings call that capital costs for its major Canadian heavy oil artery to the US have risen from more than $6.5 billion to $7.3 billion because of more construction time concentrated in the snowy winter weeks, additional environmental mitigation, enhanced coronavirus protocols and higher regulatory and legal costs. The Line 3 Replacement project would more than double crude pipeline capacity from 370,000 b/d to 760,000 b/d as it moves Canadian crude from Alberta to Superior, Wisconsin. The pipeline runs more than 1,000 miles, including its largest 337-mile segment in Minnesota where construction is currently concentrated, and would serve as a larger avenue to move more heavy crude from Canada to the Midwestern US and, ultimately, to the major refining corridor along the US Gulf Coast. “This increase really stems from our revised execution plan,” Enbridge CEO Al Monaco said. “So, not surprising, costs have come up.” However, with President Joe Biden having essentially canceled the competing Keystone XL Pipeline on the first day of his presidency, the Line 3 project is now on the precipice of becoming the epicenter of the anti-fossil fuel movement in the US as opponents aim to pressure Biden into action. The Canadian portion of the pipeline is already complete and the US portion is expected to come online in the fourth quarter, making for a race against the clock. Energy analysts are counting on the pipeline project to be completed, but Biden’s win against the industry-friendly Donald Trump has kept it from becoming a certainty. While Biden publicly opposed the more famous Keystone XL Pipeline project in his campaign, he has not weighed in on Line 3. As recently as Feb. 4, construction temporarily was impeded by protesters locking themselves to barrels of concrete and even a piano.
Urging Biden to Stop Line 3, Indigenous-Led Resistance Camps Ramp Up Efforts to Slow Construction – The Biden administration may have finally put the Keystone XL pipeline to rest, but Tara Houska has hardly had time to celebrate. Just a week after President Biden revoked Keystone’s border-crossing permit, Houska was on a video call in late January with a dozen other Indigenous activists and over a thousand spectators. She was calling on them to join her fight in northern Minnesota to stop another trans-U.S.-Canada oil pipeline: Line 3. After obtaining the final necessary permits in November, and with a Minnesota appeals courton Feb. 2 denying a request to stay construction, Enbridge Energy is speeding forward with its Line 3 replacement project, hoping to finish building the 1,031-mile-long pipeline from Alberta’s tar sands to the Midwest before the end of the year. That has Houska, and other Indigenous and environmental activists who have long fought Line 3 and similar fossil fuel infrastructure, scrambling to delay construction as they await rulings on several legal challenges to the project and call on President Biden to intervene.Over the last couple months, opponents to Line 3 have been ramping up their efforts to stop it, marching down streets, blocking roads and chaining themselves to construction equipment. In one encounter, an individual spent more than a week in a tree, suspended dozens of feet above the frozen ground, to delay work in the area.Resistance camps and protests, where activists call themselves “water protectors” and “land defenders,” have cropped up near half a dozen cities and small towns along the pipeline’s proposed route in northern Minnesota. “Just under 100 people have been arrested out defending our beautiful territory here, defending our wild rice, trying to protect the sacred with our bodies and with our freedom,” Houska said during the Jan. 26 call.
‘It’s cultural genocide’: inside the fight to stop a pipeline on tribal lands — Tara Houska gazed down at the trickling waters of the Mississippi near its headwaters. The great American river that eventually flows into the Gulf of Mexico is just a stream in these parts of northern Minnesota. A pipeline will soon burrow underneath this part of the Mississippi and its surrounding wetlands. It is one of hundreds of water crossings, including wild rice fields, that lie in the path of a new stretch of Line 3, a pipeline bringing nearly 1m barrels of tar sands a day from Alberta, Canada, to Superior, Wisconsin. But opposition to the pipeline is considerable, and is supported by environmental organizations and activists resisting pipelines such as the Dakota Access pipeline, and Keystone XL – a project that Joe Biden cancelled on his first day in the White House. The on-the-ground activists are called “water protectors”, who are against the pipeline because of its impact on the climate crisis, oil spills and infringement on Native treaty rights. There are numerous sites in Minnesota, along the new Line 3 route, where water protectors have set up camp. Much of the route goes through tribal lands, as well as Minnesota’s iron range and areas popular for recreation, including hunting, fishing and people enjoying the outdoors. It is a lush, wooded part of the state, thick with birch and pine trees, pristine lakes, rolling creeks and lakes filled with wild rice, an agricultural product that is historically significant to the Ojibwe.For the past three years, Houska, an attorney, has set up camp here with the resistance group Giniw Collective, which she founded. Last week Houska met with the congresswoman Ilhan Omar at the bridge overlooking the river, along with a group of other Native female leaders. “We need Biden to revoke the water-crossing permit,” Omar told the Guardian. “That is one of the greatest opportunities that can be given to this community.” Omar sent a letter to Biden calling on him to cancel the permits allowing the pipeline to cross under the river. Among the objections are that the line will bring an expansion of tar sands, which have higher emissions than other types of crude oil. In addition, opponents say the line is a violation of indigenous territory, as it causes pollution in lands and waters that the Ojibwe were promised to be able to use for ever.
3 arrested after locking themselves inside a Line 3 pipe — Around 11 a.m. Tuesday, Feb. 16, three self-described “water protectors” locked to one another inside of a Line 3 pipeline segment near the Crow Wing River, while dozens more rallied in support. According to a Northern Lights Task Force news release, the Wadena County Sheriff’s Office received a report of demonstrators on the pipeline right-of-way in section 4 of Huntersville Township, northeast of Huntersville. The reporting party stated there were approximately 30 individuals demonstrating and some of them were climbing on equipment and pipes at the work site. The Northern Lights Task Force is a law enforcement coalition formed to address public safety needs posed by the installation of the Line 3 pipeline across northern Minnesota. The task force reports that law enforcement arrived on scene and demonstrators got off the equipment. Enbridge construction workers told officers that four individuals climbed into the pipe “with cold weather gear and sleeping bags.” “Dispersal orders were given to the group of demonstrators that were trespassing on pipeline property. Most left the area, but three remained inside the pipe. The section of pipe was approximately 2,250 feet long and the three individuals were approximately 70 feet inside the east end of the pipe,” said the release. Three individuals – identified as Trinity Shaw-Stewart, 20, of Medford, Ore.; Bonnie Hoekstra, 22, of St. Paul, and Jack Keenan, 26, of Stevens Point, Wis. – refused to comply and stayed in the pipe for approximately six hours, according to the task force. At approximately 5:30 p.m., they exited the pipe without incident. The task force says they were taken into custody, medically cleared by medical personnel on scene, and transported to the Wadena County Jail. They were held in custody on probable cause for gross misdemeanor trespassing.
Majority of those working on Enbridge pipeline from outside Minnesota – Enbridge has fallen considerably short of goals to hire Minnesota workers for its controversial new 340-mile oil pipeline across the northern part of the state. The Calgary, Alberta-based company and union representatives have said they had expected at least 50% of its construction workforce to be from Minnesota. But at the end of December – the first full month of construction – just 33% of the 4,664 workers building the replacement for Enbridge’s current Line 3 were Minnesota residents, according to a recent filing with the Minnesota Public Utilities Commission. When broken down by hours worked on the project, the Minnesota percentage is even lower. About 28% of hours worked through December were by Minnesota residents. The filing didn’t specify the home states of other workers. With a price tag of more than $3 billion, the new Line 3 is one of the largest Minnesota construction projects in recent years. Enbridge said its labor contracts stipulate that the project’s contractors supply half the workforce. The rest come from union locals based in Minnesota. In December, just 33% of the 4,664 workers building the replacement for Enbridge’s current Line 3 were Minnesota residents.More”In many cases, local union halls include membership in neighboring states,” Enbridge said.
FINANCE: Groups push to ‘choke off’ funds to Line 3 pipeline project — Tuesday, February 16, 2021 — Environmentalists are pressuring big banks to stop lending to a Canadian energy company behind a controversial pipeline project in the Midwest.
Texas oil company agrees to pay $1.9m for Wyoming spills (AP) – A Texas oil company has agreed to pay almost $2 million for spilling crude oil and wastewater at two central Wyoming oilfields. The spills happened between the fall of 2016 and spring of 2018. One was in the Linch Complex Field in Johnson County and five were in the Salt Creek Field in Natrona County, according to the U.S. Environmental Protection Agency. The biggest spill was about 300,000 gallons (1.1 million liters). The rest were 23,000 gallons (87,000 liters) or less. Irving, Texas-based Fleur de Lis Energy, LLC, has agreed to pay a $1.9 million settlement, EPA officials said in a release Wednesday. A phone message left with the company seeking comment wasn’t immediately returned Wednesday. Fleur de Lis didn’t have adequate plans to prevent and respond to spills but recently has submitted plans that meet regulatory requirements, according to the EPA. The penalty goes into the Oil Spill Liability Trust Fund used by the U.S. government to respond to spills of oil and hazardous substances.
Biden administration stops half-million-acre Wyo oil and gas sale – President Joe Biden’s Jan. 27 order to pause oil and gas leasing on federal lands hit Wyoming on Friday as the BLM postponed the auction of 383 parcels covering almost half a million acres. The leasing pause will enable a review that’s part of an all-government fight against “a profound climate crisis” exacerbated by the burning of fossil fuels, Biden’s order states. The BLM had scheduled the first-quarter 2021 sale of development rights on 476,506 acres for March 15 after deciding the sale would not “significantly affect the rate of change” in the environment. The agency did not say when a lease sale might be rescheduled. The BLM’s first quarter sale last year brought in $3.4 million after energy companies leased 75 parcels covering 71,689 acres. Wyoming received about half the sale’s proceeds and will also get a share of future production royalties, if production ever occurs. The auction last year sold less than a sixth of the acreage that had been proposed for sale this March. Wyoming lawmakers last year, reacting to Biden campaign positions that threatened leasing, funded a report that says Wyoming would lose $304 million in annual tax revenue if leasing stopped on federal lands. That report has been much-touted in the wake of the official pause. But a critic who reviewed the report for The Wilderness Society says it overestimates impacts by up to 85%. This pie graph from 2018 shows the portion of greenhouse gasses emitted from fossil fuels extracted from federal lands in individual states and Wyoming’s 57% share. (USGS) The state-commissioned drilling-ban impact report by a University of Wyoming energy economics professor predicts production and investment losses in Wyoming, plus the lost tax revenue, would amount to $640 billion through 2040.
How Keystone XL politics have changed — Friday, February 12, 2021 — Last week, two Senate Democrats joined with all 50 Republicans to adopt a nonbinding budget amendment backing construction of the Keystone XL pipeline. Hours later, Democratic leaders stripped out the amendment and reversed the show of support for the pipeline, which would bring crude oil from Canada into the United States (E&E Daily, Feb. 5). It was the latest example of how the Keystone XL project, which once had bipartisan backing on Capitol Hill, has become a partisan environmental lightning rod. The recent Senate action marked the first significant stand-alone vote on Keystone XL since early 2015, when Republicans were in control of both legislative bodies and then-President Obama, who opposed the project, was completing his final term. That year, 28 House Democrats voted in favor of completing the pipeline, with eight Senate Democrats voting similarly in their own chamber. Although the Keystone XL project in 2015 was backed by Congress, it was ultimately vetoed by Obama. Six years later, a survey by E&E News found that of the 17 Democrats who still serve in the House today, only a small handful were willing to say definitively that they would vote to support the Keystone XL project again. Only one member said he had changed his mind, while the others declined to comment. In the Senate, six of the 2015 Democratic Keystone XL backers remain in office today. Only two of them voted with Republicans on the initial amendment of support last week.
To Keep Indigenous Women Safe Joe Biden Must Go Beyond Keystone XL – Population booms caused by resource extraction sites and nearby temporary housing, or man camps, create a “hotbed” for criminal activity that disproportionately harms Indigenous communities. When Indigenous activist Angeline Cheek learned President Joe Biden revoked the permits for the Keystone XL pipeline on his first day in office, relief washed over her, even if only for a moment. For Cheek, a member of the Fort Peck Assiniboine and Sioux Tribes in Montana, halting what would have been a 1,897-kilometre pipeline carrying 830,000 barrels of crude oil a day from Alberta’s oil sands into Nebraska, is about keeping Indigenous women safe. “I’m relieved the man camps won’t be here,” said Cheek, referring to the temporary housing erected near job sites. Fort Peck is located on the northeastern edge of Montana, and the Keystone XL would have travelled near the community. If the project were to have gone ahead, thousands of hired workers would have stayed in man camps. During the last oil boom, “it was really scary to live in our area,” said Cheek, who organizes and educates people about the dangers of resource extraction and man camps. She recalled how a teacher, Sherry Arnold, was abducted by oil workers in North Dakota, just across the state border, while out for a run. Years later, in 2017, Cheek said oil workers chased two teenagers in Fort Peck until the girls managed to duck into an unlocked house. During a walk denouncing man camps and Keystone XL, organized by Cheek, white men approached the group and threatened to scalp her, she said. “We heard all of these stories about women getting abducted, and we’d hear about sexual assaults happening,” Cheek said. “You hear this stuff and it triggers you.” Biden’s decision to stop Keystone XL’s expansion limits the number of new transient workers who will flow into the area, ultimately quelling some fears that violence targeting nearby Indigenous communities will spike as a result of the pipeline. But more needs to be done to keep Indigenous peoples safe, especially since these problems are replicated across North America, Cheek said.
Black Hills CEO Says ‘Lethal’ if Natural Gas Bans Enacted in Service Territories – Rapid City, SD-based Black Hills Corp. is undeterred by increased pressure from climate change advocates to phase out fossil fuel use, CEO Linn Evans said Wednesday. During a conference call to discuss fourth quarter results, Evans discussed the impact by opponents to fossil fuels and whether that could impact the natural gas utilities. He said he was “very comfortable” with the company’s local distribution companies (LDC). “Our service territories are very cold climates that are below zero degrees right now, so life would be lethal without the gas that we serve,” he said. “We have not had any local bans on gas within our service areas, but we are certainly aware of conversations going on and we have highly engaged teams executing outreach programs within those individual communities.” Black Hills utility personnel are in contact with state legislators and working with various industry associations on the issue of natural gas bans. “We’re making sure our communities and stakeholders understand the value and necessity of gas and what it brings to the table,” he said. “We’re watching it closely and see a strong future for gas.” CFO Rick Kinzley said the impacts from Covid-19 on gas and electric loads “were not substantial at all” as most of the territory did not have prolonged lockdowns. “We’re about halfway through our heating season, and the first one with the pandemic, and the impact on our gas loads is what we call immaterial,” Evans said. Regulatory relations in the territories served in Arkansas, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming remain strong, executives said. However, that’s not the case in Colorado. “We’re disappointed that the Colorado Public Utilities Commission dismissed our rate review filing,” Evans said. “We’re seeking a rehearing, and the commission should decide on that by the end of this month.”
ND oil production falls slightly in December – – North Dakota’s oil production made a slight dip again with 1.192 million barrels of oil produced in December 2020. In November 2020 the state produced 1.227 million barrels of oil. The most recent figures were released by the North Dakota Department of Mineral Resources on Friday. Lynn Helms, director of the Mineral Resources Department, said in his report the OPEC+ agreement to cut 7.2 million barrels per day expired. He said OPEC+ met on Feb. 3 “emphasizing the ongoing positive contributions of the Declaration of Cooperation in supporting a rebalancing of the global oil market and noting the significant additional voluntary supply adjustment made by Saudi Arabia, taking effect on 1 February, 2021, for two months. Overall conformity with the original production adjustments was 101 per cent.” He said they will discuss production again at their March 2021 meetings “with a general consensus to maintain $45-$55 WTI (West Texas Intermediate.” “The two biggest uncertainties are COVID and Biden administration policies on Iran,” Helms also said in his report.
Equipment failure causes crude oil release near Williston -An equipment failure at a saltwater disposal well in the Williston area released 25,200 gallons of crude oil on Monday. The North Dakota Oil and Gas Division was notified of the release at the WISCO 1 saltwater disposal well, about 16 miles west of Williston. WISCO reported the incident on Monday. The product was contained on-site and at the time of reporting all of the crude oil had been recovered. A state inspector has been to the location and any additional cleanup will be monitored.
U.S. Army Corps attorneys withdraw from Dakota Access Pipeline case – (Reuters) – The U.S. Army Corps of Engineers said two federal attorneys representing it in an ongoing legal battle over the Dakota Access Pipeline are withdrawing from the case, according to court filings, as opponents fight for the line’s closure. The case is being closely watched by native groups and the energy industry, particularly after the Biden administration canceled a permit for the long-gestating Keystone XL project and has taken other steps to limit oil-and-gas exploration. Jeffrey Clark Sr and Eric Allen Grant, who represented the Army Corps, are withdrawing from the case between the Standing Rock Sioux Tribe and the Corps, the filing said. The tribe is seeking the closure of the Dakota Access pipeline, which can carry roughly 550,000 barrels of oil daily from North Dakota’s shale region to the Midwest. Clark left the U.S. Justice Department at the end of former President Donald Trump’s term. Divisional heads at the U.S. Department of Justice frequently change hands with the onset of a new administration. It is unclear whether President Joe Biden, who was sworn in last month, will seek to close the pipeline. A judge in January revoked the line’s permit to operate under Lake Oahe, a water source for the Standing Rock tribe.
The Dakota Access Pipeline continues to operate, but under an unclear future – (KFYR) – A decision on whether the Dakota Access Pipeline would be shut down was supposed to take place on Feb. 10, but the deadline has been extended. The Army Corps of Engineers said they need more time to discuss what to do regarding the pipeline with the new Biden administration. Oil and gas industry leaders said this buys them more time, but offers no clarity on what’s ahead. The impact on North Dakota if Dakota Access were to shut down would be dramatic. About 570,000 barrels of oil per day would need to find a new, more expensive route to market, which could cost the state about half a million dollars per day. “That is of enormous concern to the state,” said Department of Mineral Resources Director Lynn Helms. Those numbers are why state officials have been writing to the Army Corps and the administration in a plea to keep the pipeline operating. Industry leaders said finding an alternative way to market right now, like returning to rail, would be tough. “It would likely take several months at least before the industry could start shifting and transitioning those barrels more and more onto the rail cars. So there would certainly be production and economic shock,” said North Dakota Pipeline Authority President Justin Kringstad. The current decision extension, however, does buy the industry some time with no surprise shutdowns expected from the executive branch, at least not before the next hearing on the matter. ADVERTISEMENT “It was actually the Biden administration that asked for the extension so they could give it some review before that hearing,” said Helms. Helms added it’s also been helpful to have MHA Nation leaders on their side, reaching out to the administration asking for the pipeline to continue operating. However, the Standing Rock Sioux Tribe is still fighting for the opposite outcome, to have the pipeline shut down. The hearing deciding whether the Dakota Access Pipeline will be able to continue operating while another environmental review happens will take place on April 9.
Probe into Dakota Access protest continues 4 years later – A violent clash four years ago between Dakota Access Pipeline protesters and law enforcement is still being investigated, and one protester has been arrested for contempt of court after refusing to provide grand jury testimony, his attorneys said. No one has been criminally charged in the November 2016 clash that severely injured Sophia Wilansky, 21, of New York. She has sued law enforcement officers and Morton County, alleging police intentionally targeted her with a concussion grenade. Officers have denied wrongdoing. Federal authorities arrested fellow protester Steve Martinez on Feb. 3 for contempt of court, according to his attorneys, who said his detainment is tied to Wilansky’s lawsuit and government attempts to blame protesters, the Bismarck Tribune reported. Assistant U.S. Attorney Gary Delorme did not respond to a Bismarck Tribune request for comment. In 2016 and 2017, American Indian tribes and environmental advocates tried unsuccessfully to halt construction of the Dakota Access Pipeline under the Missouri River, fearing an oil leak would contaminate the water. Pipeline operator Energy Transfer and federal officials who approved the $3.8 billion line maintain it’s safe. The pipeline has been moving Bakken oil since June 2017. More than 750 people were arrested during six months of protests. On Nov. 20, 2016, protesters tried to push past a blocked highway bridge but were turned back by authorities with tear gas, rubber bullets and water sprays. Police say protesters threw rocks and other objects at officers. Wilansky’s left arm was injured in an explosion and her father said at the time that doctors considered amputation because her forearm was nearly torn off. Protesters allege the blast was caused by a concussion grenade thrown by officers; police say protesters rigged a propane canister to explode. So far, neither theory has been proven.
Chevron estimates up to 750 gallons of mixture spilled into the Bay – The California Department of Fish and Wildlife said Wednesday that the impact from Tuesday’s petroleum product leak at the Chevron refinery long wharf in Richmond appears to be centered near the city’s Keller Beach, but no oiled wildlife or public health impacts have been found.In an update Wednesday evening, Chevron said as much as 750 gallons of the product were leaked. “Lab analysis and technical review determined that approximately 12-18 barrels (500-750 gallons) of a low-sulfur diesel fuel and flush water mix was released,” the company said in their updated statement. Initial estimates said that 600 gallons went into the Bay between 2:40 p.m. Tuesday and about two hours later when the leak was stopped, according to Contra Costa County Supervisor John Gioia. Petroleum leaked from a quarter-inch hole in an unpressurized wharf pipeline.For its part, Chevron has not yet disclosed the size of the hole, nor the exact duration of the spill. Much of this information is already in the company’s possession. “We’re getting very close on an estimate and we’ll release that as soon as we can,” said Chevron refinery executive Lynsi Crain just before the evening update.
New Bill Seeks to Ban Fracking in California — California state senators introduced a bill Wednesday that would ban fracking and other controversial oil and gas extraction techniques in the state by 2027. The bill, SB467, would prohibit the government from issuing new fracking permits or renewing old ones as of Jan. 1, 2022, The Guardian reported. The bill’s authors also plan to amend it to outlaw any new oil or gas production within 2,500 feet of a school, home, healthcare facility or any form of long-term accommodation, including prisons, by Jan. 1, the San Francisco Chronicle reported.”Fracking & other destructive oil extraction methods are deeply harmful to our environment & public health,” Sen. Scott Wiener, who introduced the bill with fellow Democratic Senator Monique Limon, wrote on Twitter. “They contaminate water, increase particulate in the air, & make people sick. And oil is at the heart of climate change. California must lead on climate & public health.”The new bill also promotes environmental justice with the pending addition restricting oil and gas production near schools and homes.”Overwhelmingly, it’s happening in communities of color and low-income communities,” Wiener told the San Francisco Chronicle concerning oil production. “Communities that are already struggling with health outcomes – we’re allowing them to be poisoned, and that’s just not OK.”California possesses a progressive reputation on environmental issues, but it also contains a powerful fossil fuel industry that has successfully lobbied against legislation that would limit its operations, The Associated Press reported. However, the state’s oil production has declined since the 1980s, partly because the oil that remains requires measures such as fracking, cyclic steaming, acid well stimulation and water and steam flooding to extract it from deeply buried rock. “It’s some of the dirtiest oil in the world,” Hollin Kretzmann, an attorney at the Center for Biological Diversity’s Climate Law Institute, told The Associated Press. The new bill would ban all of these methods, which its authors view as environmental and public health threats, according to the San Francisco Chronicle. Cyclic steaming in particular has been linked to oil spills that harm wildlife, the Palm Springs Desert Sun reported.
Federal appeals panel stops work on ConocoPhillips’ Willow project – A federal appeals court has sided with conservation and Indigenous groups and halted winter work at a major ConocoPhillips oil project on Alaska’s North Slope.The 9th U.S. Circuit Court of Appeals on Saturday issued the six-page decision, by 9th Circuit Judges William Canby and Michelle Friedland, on Saturday.The decision will halt on-the-ground work at Willow for the year, said Natalie Lowman, a spokeswoman with ConocoPhillips, in an email Sunday.Winter activity at developing projects on Alaska’s North Slope is supported by ice roads that melt in the spring, sharply reducing on-the-ground activity for all but a handful of months. The project, among the most promising North Slope prospects, was expected to employ about 120 people this year.Lowman did not say if the company plans to appeal the decision. Other questions must be answered later, she said.Sovereign Inupiat for a Living Arctic, the Center for Biological Diversity, Friends of the Earth and other groups sued last fall to stop the project, not just in winter, but altogether. They argue that federal agencies under the former Trump administration did not follow environmental laws before approving the project.The Willow project is located in the National Petroleum Reserve-Alaska in northern Alaska, near the village of Nuiqsut.ConocoPhillips had planned to break ground at a mine site early this month, blasting away the surface to reach gravel, according to court records. The company had planned to haul gravel and start gravel road construction in mid-March. If developed, the field could produce 600 million barrels of oil over 30 years, boosting state revenues and jobs, estimates say.
Western Canada’s refineries provide a bonanza of fuels, part 2 – Long established as an oil-producing region, Western Canada has also become a major producer of refined products. With enough oil available to serve the nine refineries in the region, there is no need to import crude oil, making Western Canada one of the few parts of the world where the refineries are completely self-sufficient regarding oil supply. The region is also noteworthy in that, like the U.S. Gulf Coast, its refining capacity and gasoline, diesel, and jet fuel output is vastly greater than its own demand, resulting in a large surplus of refined fuels that can be sent across Canada and exported to the U.S. Today, we look westward, focusing on the nine refineries located in the Canadian West. Although the presence of crude oil in Western Canada had been known to First Nations inhabitants for centuries, oil production did not really pick up momentum and scale until just after the end of World War II. The celebrated Leduc No. 1 oil discovery in 1947 near Leduc, AB – just south of the provincial capital of Edmonton – kicked off the modern oil industry across Western Canada, resulting in a steadily growing supply of crude oil to its own refineries, those in other Canadian provinces, and the U.S. That growing production has allowed all 17 of Canada’s refineries, which we summarized in Part 1, to partly or fully wean themselves off imported crude oil. In 2020, Canada’s crude oil imports averaged 435 Mb/d, down from 800 Mb/d 10 years earlier, with most of the imported crude now being sourced from the U.S. With crude runs to Canadian refineries averaging 1.59 MMb/d in 2020, the roughly 1.15-MMb/d difference between those runs and imports (1.59 – 0.435) is largely supplied by Western Canada.
Power Outages Hit Mexico as U.S. Natural Gas Prices Reach Historic Highs – Mexico’s electric power operator Centro Nacional de Control de Energ’a (Cenace) said 2,200 MW of power was still offline in the northern states of Chihuahua, Coahuila, Nuevo Leon and Tamaulipas, and pleaded Tuesday for the efficient use of energy as the crisis was still days from being over. Rolling blackouts were planned on Tuesday evening throughout Mexico in Aguascalientes, Colima, Estado de Mexico, Guanajuato, Guerrero, Jalisco, Michoacfln, Nayarit, Puebla, Queretaro, San Luis Potos’ and Zacatecas. Cenace and Mexican state utility Comision Federal de Electricidad (CFE) blame limited natural gas imports and surging natural gas prices for the outages. Mexico imports 70-80% of its natural gas from the United States and 60% of the nation’s power plants run on the fuel. Due to “bitterly cold air” making its way into the Midcontinent and Deep South of the United States, “massive amounts” of natural gas production were offline as of early Tuesday, as were numerous gas-fired power plants, EBW Analytics Group analysts said in a note to clients. The “extreme cold” has “brought chaos to the U.S. oil, gas and power markets,” the EBW analysts said. “Texas has been hardest hit … More than 30 natural gas pipelines have declared force majeure and at least 7 Bcf/d of natural gas production has been shut in due to freeze-offs, gas processing plant shut-ins and pipeline outages.”
Abbott Nixes Gas Exports Outside of Texas as Mexico Already Facing Cold-Induced Supply Crunch – A clearer picture was emerging on Wednesday of a massive natural gas shortage facing Mexico amid the extreme cold gripping Texas, Mexico’s main source for the fuel. The supply shortfall was punctuated by a late-breaking announcement Wednesday from Texas Gov. Greg Abott that he was prohibiting the sale of natural gas produced in Texas outside of the state, and ordering producers to instead supply gas to local power generators in order to curb the extended power outages plaguing the state amid a severe cold snap. The order will remain in effect through Feb. 21, Abbott said during an afternoon news conference.Abbott said that about 19,800 MW of gas-fired generation remained offline in Texas because of either mechanical issues or insufficient gas supply, necessitating the order to keep locally produced gas within state lines. Abbott’s announcement was met with disbelief from observers of the energy market in Mexico, which relies on U.S. gas supply, mostly from Texas, for up to 80% of its natural gas needs. Gas-fired plants account for about 60% of power generated in Mexico. Meanwhile, Mexico’s Centro Nacional de Control del Gas Natural (Cenagas), operator of the Sistrangas national pipeline grid, declared a systemwide state of critical alert on Tuesday until further notice, citing scarce gas supplies from Texas due to the inclement weather.The alert came amid rotating blackouts enacted by power grid operator Centro Nacional de Control de Energ’a (CENACE) for the same reason.Cenagas said that due to the arctic air mass in the southern United States, injections into the Sistrangas remained below the amounts scheduled, restricting the availability of the molecule for system users, a situation “outside the control” of the operator.”The polar vortex is indeed taking its toll on Mexico’s natural gas market,” Genscape Inc.’s Ricardo Falcon, natural gas analyst, told NGI’s Mexico GPI on Wednesday. He said that based on Genscape’s estimates, U.S.-to-Mexico pipeline gas exports had averaged 4.7 Bcf/d over the last six days, about 1.1 Bcf below the average of the preceding 30 days.”Several border crossing points are showing weaker-than-normal flows, especially those linking to pipes in Mexico’s north and northeast,” Falcon said.Apart from the Sistrangas, Falcon highlighted that most of Mexico’s major privately-owned pipelines had declared critical alerts as well due to the pervasive supply restrictions, operational flow orders (OFOs) and force majeures north of the border.The privately-owned systems include, but are not limited to, Fermaca’s Waha-to-Guadalajara system, as well as pipelines owned by TC Energy Corp. and Infraestructura Energetica Nova (IEnova), Falcon said. “We believe that industrial users may face the strongest short-term impact under the Cenagas contingency, given the supply cuts imposed by the system operator.”
Texas mandate to bar natural gas exports during power crisis likely unenforceable – official –(Reuters) – The Texas oil and gas regulator on Thursday alerted state natural gas producers of a directive to reserve their supplies for in-state electric generation even as one member questioned whether the directive could be enforced. Governor Greg Abbott on Wednesday issued an executive order restricting gas exports and asked the state regulator to “take all reasonable steps” to keep fuel in Texas until Sunday, a decision challenged by gas importer Mexico. Days of freezing temperatures shut in about one-fifth of the region’s refining capacity, shuttered oil and natural gas wells and affected power generation in Mexico, which imports Texas natural gas. The Texas Railroad Commission, the state’s oil and gas regulator, likely does not have the authority to interfere with contracts between companies to sell gas out of state, Commissioner Jim Wright said in an interview on Thursday. Producers “are certainly focused on selling everything they can into Texas, but they’re obligated under contract,” said Wright, one of three elected commissioners. “I’m not sure we have authority to mess with that, nor do I really want to.” There has been no practical impact from Abbott’s order on the gas market, said Bernadette Johnson, vice president at data firm Enverus. Less natural gas has been leaving Texas, but that was because producers had to shut in wells because they lost power and equipment froze. “You can’t just stop a pipe at the border and turn it around. That’s not a thing,” said Johnson. “The systems are not designed with these crazy orders in mind.”
Natural Gas Flows from Texas to Mexico Taking Hit, but Worst Appears to be Over – Despite a Wednesday evening order from Texas Gov. Abbott to prioritize in-state consumption, natural gas continued to flow from Texas to Mexico Thursday, albeit at reduced levels. Scheduled deliveries of piped gas to Mexico from Texas hit 1.6 Bcf/d Thursday, up from 1.3 Bcf/d on Wednesday and 1.1 Bcf/d on Tuesday. Typical export volumes from the state generally exceed 2 Bcf/d. As a percentage of total pipeline deliveries, natural gas exports to Mexico were 16.3% on Thursday, compared to an average of around 25% for the first week of February. “Both the absolute volumes of gas sent to Mexico and the relative percentage of gas shipped to Mexico versus total deliveries from Texas pipelines have fallen in recent days. Texas shippers are definitely doing more to keep domestic customers whole than they are consumers in Mexico,” said NGI’s Director of Strategy and Research Patrick Rau. Matthew Lewis, senior director of research at East Daley Capital Advisors said that based on pipeline nominations Thursday “there are still significant gas flows into Mexico. There also appears to be gas flowing West on El Paso leaving the state of Texas.” He added that despite the governor’s order, the language may leave room for certain types of customers to still transport gas out of the state. “Whether or not the governor has the authority to allow producers to not fulfill existing contracts is still unclear,” Wood Mackenzie analysts said. The order is effective through Sunday. But improving weather conditions in Texas and power being turned back on in homes on Thursday may also have eased the potential strain.
LNG Import Terminals in India, Europe to Add Capacity as Demand Grows -Belgian midstreamer Fluxys said Monday that it has made a positive final investment decision to nearly double the regasification capacity at its Zeebrugge liquefied natural gas (LNG) import terminal after a successful open season. The company said the full 6 million metric tons/year (mmty) of additional regasification capacity at the facility in Belgium was fully subscribed during a binding open season. Fluxys said it would move ahead on construction of the infrastructure required to expand the terminal. The expansion would be completed in two phases. Another 4.7 mmty would be made available in early 2024, while the full 6 mmty would become available in early 2026, almost doubling the terminal’s capacity, Fluxys said. Europe remains a top destination for U.S. LNG exports, accounting for roughly 40% of all cargoes that left the country between January 2020 and January 2021, according to NGI calculations. Fluxys’ announcement followed another from Petronet LNG, India’s top LNG importer, at a news conference Friday. Petronet CEO A.K. Singh reportedly said the company plans to increase capacity by 29% from current levels to 22.5 mmty at its Dahej terminal in western Gujarat state. Capacity at the terminal is to be added in two phases. The first 2.5 mmty expansion is set for the next three to four years, while a similarly-sized expansion would be completed sometime after that. Indian LNG imports have been increasing steadily in the last decade, hitting a record high early last year, according to data intelligence firm Kpler. India has typically been a consistent home for Qatari cargoes, but those sourced from the United States have increased in the last year, Kpler said recently. India is aiming to curb emissions by increasing the share of natural gas used in its energy mix to 15% from current levels of 6.2%.
Failed valve on cargo ship causes oil spill in bay – A valve problem on a bulk carrier anchored in British waters in the Bay of Gibraltar caused an oil spill on Friday, some which drifted into the harbour basin. As boat marinas inside the harbour deployed booms to stop the spill damaging boats, the Gibraltar Port Authority implemented its counter pollution plan and liaised too with Spanish authorities, who assisted in containing the spill. As clean-up operations got under way inside the harbour and in the bay, two vessels from Spain including a large salvage tug operated by Salvamento Maritimo deployed booms at sea to contain the spill as it drifted toward La Linea. Crew on the AM Ghent confirmed that the spill was caused after one of its venting valves failed. The GPA’s Bunkering Superintendent attended to investigate the issue further and coordinate the clean-up. “The Captain of the Port contacted his counterpart in Algeciras to inform him of the situation and although assistance was offered, it was declined but special permission was granted for two Spanish assets to come into BGTW to prevent oil from transgressing the median line in the bay,” a government spokesman said.
Oil spill ship detained as clean-up continues – The ship that caused an oil spill last Friday will be detained in Gibraltar waters until the Gibraltar Government can recover the costs of a clean-up operation over the bank holiday weekend. Specialist vessels and teams on land have been busy scooping up fuel oil from the sea and the shoreline following the spill. Much of the oil drifted into the harbour basin but there were patches spotted out in the bay including in the area of Rosia Bay. Dr John Cortes, the Minister for the Environment, acknowledged the impact of the spill on wildlife, particularly inside the harbour. “Over the last ten years the marine life in our harbour had come back in strength and it was becoming a key wildlife area,” he said. “This is a significant setback which we are monitoring closely and we are working hard to minimise the impact as much as possible.” “But it will take time to recover.” The spill appears to have been caused by a valve problem on the Liberian-flag bulk carrier AM Ghent during a bunkering operation while anchored in British waters in the Bay of Gibraltar. An anti-pollution operation involving vessels from Gibraltar and Spain tried to contain the spilt fuel to prevent it from reaching shore. But an oily sheen stretched across much of the north end of the bay over the weekend, while inside Gibraltar harbour thick tendrils of black gunk floated on the water emitting a powerful fuel smell. Booms were stretched across the entrance of marinas inside the harbour to limit the amount of spill that could drift inside and damage boats. A specialist vessel sucked up the fuel floating on the surface, although the size of the spill is significant and the was work was ongoing on Monday. “I am very satisfied with the work being done by all those involved and this will not stop until the oil has been cleaned up fully,” said Vijay Daryanani, the Minister for the Port. “I will make sure that we carry out a full investigation into how this accident occurred as soon as possible.”
Oil spill stops shiploading at W Australias Geraldton – Australian iron ore mining firm Fenix Resources has stopped loading the Ya Tai 2 bulk carrier after mechanical issues caused an oil spill at the port of Geraldton in Western Australia’s (WA) MidWest region. The cargo, the first loaded by Fenix from its 1.25mn t/yr Iron Ridge project, was under contract to Chinese firm SinoSteel International. SinoSteel is responsible for chartering the vessel as part of an fob contract under the offtake agreement between SinoSteel and Fenix, according to the Australian firm. Fenix had loaded 5,004 wet metric tonnes (wmt) of 64pc Fe lump onto the 76,000 deadweight tonne (dwt) capacity Ya Tai 2 before the mechanical issues stopped loading. It is unclear if the rest of the cargo can be loaded onto the ship and Fenix is looking at other export options. The firm’s second shipment is due be loaded at Geraldton from 27 February. Geraldton is becoming increasingly busy, with new iron ore mining firm GWR making its first shipment last week and shipments of wheat and other grains increasing because of higher WA rainfall. WA iron ore mining firm Mount Gibson also plans to restart shipping through the port from mid-2021 when its begins sales from its 1.5mn t/yr Shine project. It is unclear if the oil spill has affected shipping from other firms using Geraldton.
Oil spill from TTPL sparks environmental concerns –A leakage in the pipeline carrying furnace oil to the boiler at Travancore Titanium Products Ltd (TTPL) on Wednesday caused oil spill in the sea along Shanghumugham-Veli coast forcing a temporary ban on visit to tourism spots and fishing activities for 48 hours. Tourists will be prohibited from entering Veli, Sanghumugham and Vettucaud beaches on Thursday too. The pipeline carrying the furnace oil runs above the drainage line and the spilled oil directly flowed into the drainage line leading to the sea. About 5,000 litres of oil is estimated to have been leaked. High-pressure pumping caused excessive leakage following the pipe burst. The authorities said approximately 2,000 litres of oil must have spilt into the sea. Later in the day, the TTPL stopped operations following a directive from the pollution control board. PCB issued a letter to TTPL expressing strong objection over the company’s failure to inform it about the oil spill. The agency has instructed PCB instructed TTPL not to resume operations until containment, cleansing and disposal measures are completed. An emergency response team has managed to contain the flow by blocking the drainage line. The recovery of spilt oil has also been initiated. With sea waves washing ashore the oil, thick tar has been formed on the beach. Saw dust is being sprayed over the tar which is then scooped up and stored at TTPL and will be disposed of scientifically. The team is also in talks with technical firms to engage machinery for the recovery of oil sediments. The damaged pipeline will be replaced. Generally, around 26,000 litres of furnace oil are stored at TTPL and 12,000 litres are used daily to generate steam and for other burning purposes. Such an oil leakage has been reported at TTPL for the first time and the company has initiated an internal inquiry. An acid plant is generally used to generate steam but as it was shut down, furnace oil was used for the purpose. A Coast Guard ship and an aircraft conducted surveillance over the coastal area following the oil spill. The officials of pollution control board visited the site and assessed the situation. District authorities havedirected TTPL to remove the sand littered with oil on the beach from Vettucaud to Veli.
Shell reports Nigeria to WBank panel over oil spill dispute – Royal Dutch Shell Plc along with its Nigerian subsidiary, the Shell Petroleum Development Company (SPDC), has launched arbitration proceedings against the federal government over a long-running dispute with a Rivers community.The oil major’s Netherlands-registered holding company and SPDC filed the case at the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) on February 10.This is coming as the Joint Venture (JV) between the Nigerian National Petroleum Corporation (NNPC) and Total E & P targets to hit first oil in the $500 million Ikike Oilfield from the last quarter of 2021.A post on the website of the Washington-based World Bank dispute resolution body, indicated that the hearing of the case marked “Shell Petroleum N.V. and The Shell Petroleum Development Company of Nigeria Limited v. Federal Republic of Nigeria (ICSID Case No. ARB/21/7)” was still pending.It listed the claimant’s representative as Debevoise & Plimpton, London, UK and New York, NY, U.S.A, while the respondents representatives were named as the Attorney-General of the Federation and Minister of Justice, Abuja, Nigeria, Solicitor-General of the Federation and Permanent Secretary to the Federal Ministry of Justice, Abuja, Nigeria as well as the Federal Ministry of Justice.The World Bank’s arbitration body is a leading institution devoted to international investment dispute settlement, having administered the majority of all international investment as agreed to by participating states.It was set up under a multilateral treaty formulated by the executive directors of the World Bank to further its objective of promoting international investment. It was established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) and has handled over 700 cases.
Nigerians can now sue Shell in the UK for oil pollution –Nigerians can sue Shell in English courts for damage to communities caused by oil spills in the Niger Delta, the UK’s Supreme Court said on Friday, allowing the communities to bring their claims for compensation and clean-up in UK courts. The Supreme Court ruled in favor of the Ogale and Bille communities who have contended that Shell should be held liable for the oil spills under the supervision of its Nigerian subsidiary SPDC.The UK Supreme Court overturned a split decision of the Court of Appeal and held that the two cases brought by the Ogale and Bille communities are arguable and can proceed in the English courts.The Supreme Court ruling adds another precedent for oil companies who can be sued in their domicile for oil spills and other harm to communities in other countries. Last month, The Hague Court of Appeal ordered Shell to compensate Nigerian farmers for two oil spills in the country 13 years ago, in the first lawsuit in which a company has been held liable in the Netherlands for its actions abroad. Shell hasn’t argued that the oil spills did not happen, but has always said that the spills happened in communities with rampant oil theft and infrastructure sabotage.”Regardless of the cause of a spill, SPDC cleans up and remediates. It also works hard to prevent these sabotage spills, by using technology, increasing surveillance and by promoting alternative livelihoods for those who might damage pipes and equipment. Unfortunately, such criminal acts remain the main sources of pollution across the Niger Delta today,” a spokesperson for Shell said, as carried by Sky News. Persistent issues with theft and sabotage in the Niger Delta could prompt Shell to take a hard look at its operations onshore Nigeria, the supermajor’s chief executive Ben van Beurden said last week. Daniel Leader, a partner with law firm Leigh Day representing the Nigerian communities, said, commenting on Friday’s ruling: “This Supreme Court judgment gives real hope to the people of Ogale and Bille who have been asking Shell to clean up their oil for years. We hope that now, finally, Shell will act. But it also represents a watershed moment in the accountability of multinational companies.”
Funds bought U.S. crude ahead of big freeze: John Kemp – (Reuters) – Hedge funds purchased more petroleum last week, but buying was almost entirely concentrated in WTI, which suggests it was driven by the prospect of freezing weather temporarily hitting U.S. oil production. Hedge funds and other money managers purchased the equivalent of 33 million barrels in the six most important petroleum-linked futures and options contracts in the week to Feb. 9. But the buying was concentrated in NYMEX and ICE WTI (+30 million barrels) and to a lesser extent European gas oil (+7 million), according to ICE Futures Europe and the U.S. Commodity Futures Trading Commission. There were only very minor changes in Brent (+2 million) and U.S. diesel (+1 million) while U.S. gasoline (-5 million) saw selling for the second week running (https://tmsnrt.rs/3tY3c2l). Combined positions across all six contracts are now just over the 80th percentile for all weeks since 2013, implying most portfolio managers anticipate further price increases in the short term. Fund managers have increased their bullish positioning for 14 weeks running, by a total of 531 million barrels, the longest and largest increase in bullish positions since the first four months of 2019. The hedge fund community remains bullish even though crude prices have increased by more than half in less than three months since the first successful coronavirus vaccines were announced in early November. But the concentration of buying in WTI implies that much of the buying in the most recent week was fuelled by U.S.-specific factors, while the more internationally-oriented Brent contract saw little change. Forecast freezing weather, which has now arrived, was expected to hit oil and gas production across the Great Plains and down into the Permian Basin of Texas, temporarily curbing crude supply in the United States. On the other side of the Atlantic, buying in European gasoil was likely driven by the prospect of colder weather across much of Europe as well as the strong recovery in global freight and manufacturing consumption.
Oil rises on fears of heightened tensions in Middle East – Oil prices rose to their highest in more than a year on Monday, after a Saudi-led coalition fighting in Yemen said it intercepted an explosive-laden drone fired by the Iran-aligned Houthi group, raising fears of fresh Middle East tensions. Hopes for more U.S. stimulus and an easing of coronavirus lockdowns helped support the rally, after prices gained around 5% last week. Brent crude was up 66 cents, or 1.1%, at $63.09 a barrel at 0004 GMT, after climbing to a session high of $63.44, the highest since Jan. 22, 2020. U.S. West Texas Intermediate (WTI) crude futures gained 86 cents, or 1.5%, to $60.33 a barrel. It touched the highest since Jan. 8 last year of $60.77 earlier in the session. The Saudi-led coalition fighting in Yemen said late on Sunday it intercepted and destroyed an explosive-laden drone fired by the Iran-aligned Houthi group toward the kingdom, state TV reported. “An early spike in oil markets was triggered by the news,” said Kazuhiko Saito, chief analyst at commodities broker Fujitomi Co. “But the rally was also driven by growing hopes that a U.S. stimulus and easing of lockdowns will boost the economy and fuel demand,” he said. WTI may be pulled back by profit-taking as it reached a key $60 level, he added. U.S. President Joe Biden pushed for the first major legislative achievement of his term on Friday, turning to a bipartisan group of local officials for help on his $1.9 trillion coronavirus relief plan. Oil prices have rallied over recent weeks also as supplies tighten, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the group OPEC+.
Oil hits pandemic high as winter storm pushes demand and poses production risk – Freezing weather in regions across the U.S. sparked another rally in energy prices and put West Texas Intermediate crude on pace to settle above $60 a barrel for the first time since the early days of the coronavirus pandemic. WTI crude futures rose 67 cents, or 1.1%, to $60.14 a barrel Monday morning around 10:08 a.m. ET. The jump brings WTI crude futures up 24% so far in 2021. It touched $60.77 a barrel earlier in the session, its highest level since January 2020. Brent crude, the international benchmark, climbed 1.3% to $63.26 after hitting its own 13-month high. The latest pop in the energy market came as cold weather racked portions of the U.S. and fostered demand for power and fuel while simultaneously threatening to hamstring production in Texas. “Winter storm and arctic blast of cold weather that is making its way south to Houston may have some severe impacts on the oil industry,” oil analyst Andy Lipow wrote over the weekend. “Frigid weather means that many oil wells may be shut in. Water is produced along with oil, that water can freeze up equipment,” he added. “The cold air affects oil production in Canada, North Dakota, Oklahoma, Texas and elsewhere.” More than 150 million Americans are currently under some category of winter weather advisory, according to the National Weather Service. As of early Monday morning, the agency was predicting a “major winter storm” to dump heavy snow and significant ice from the southern plains and Ohio Valley into the Northeast. Lipow, president of Texas-based Lipow Oil Associates, added that while the winter storm likely isn’t as severe as the Category 5 hurricanes the Gulf Coast has come to know, odds are good refineries will slow operations and prepare for outages. He also noted that the storm is partly to blame for a steady rise in gasoline prices over the last week. Analysts expect that the EIA’s next weekly report, due Tuesday, will show that retail gas prices climbed further. The recent rally in crude prices also marks an extension of the oil market’s rebound since the coronavirus pandemic gutted demand for petroleum products throughout much of 2020 and sent crude prices reeling in April.
Oil price rally points to more OPEC+ easing from April -sources (Reuters) – OPEC+ oil producers are likely to ease curbs on supply after April given a recovery in prices, OPEC+ sources said, although any increase in output will be modest as producers are wary of fresh setbacks in the battle against the pandemic. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, slowed the pace of a planned output increase in January to match weaker-than-expected fuel demand due to continued restrictions on population movement because of the pandemic. Saudi Arabia made additional voluntary cuts to supply for February and March. An oil rally since then to a 13-month high to almost $64 per barrel has boosted confidence among producers that the market could absorb more supply. Forecasters, including OPEC, are predicting a record rise in demand this year as vaccines are rolled out, despite current weakness. [OPEC/M] “Yes, if demand recovers as we expect, OPEC+ will ease the production adjustments gradually, always thinking about reducing the inventory overhang,” said an OPEC delegate, asked if the oil rally would make easing more likely from April. OPEC+ meets to set policy on March 4. The two key questions for the group will be whether Saudi Arabia rolls back its voluntary cut of 1 million barrels per day (bpd) – which is due to end next month – and whether there is room for an additional increase in supply from the whole group. Saudi Arabia’s voluntary cut of 1 million barrels per day (bpd) ends next month. While Riyadh hasn’t shared its plans beyond March with its OPEC+ partners, expectations in the group are growing Saudi Arabia will bring back the supply from April, perhaps gradually. “Oil prices are very good now so there is no need for the Saudis to continue with the voluntary cuts beyond March,” an OPEC+ source said. “But it is not clear if the Saudis will bring back the 1 million bpd gradually or not.” Iraq’s oil minister said on Feb. 10 Saudi Arabia would likely abandon the voluntary cut after the March meeting, and also said OPEC+ would keep its output cuts policy unchanged. Still, with prices rising, some in OPEC+ are likely to propose a modest rise in output, although this could depend on whether Saudi Arabia ends the voluntary cut all at once.
Oil prices climb as deep freeze shuts U.S. oil wells, curbs refineries (Reuters) – Oil prices rose on Tuesday as a cold front shut wells and refineries in Texas, the biggest crude producing state in the United States, the world’s biggest oil producer. Prices also gained as Yemen’s Iran-aligned Houthi group said it struck airports in Saudi Arabia with drones, raising supply concerns in the world’s biggest oil exporter, and on optimism for a global economic recovery amid accelerated COVID-19 vaccine rollouts. Brent crude was up 14 cents, or 0.2%, at $63.44 a barrel at 0740 GMT, after rising to its highest since January 2020 in the previous session. U.S. West Texas Intermediate (WTI) crude futures gained 61 cents, or 1%, to $60.08 a barrel. WTI did not settle on Monday because of a U.S. federal holiday. Prices will settle at the close of trading on Tuesday. “The unexpected U.S. supply disruption provides another short term price recovery bridge that has likely taken oil prices to a level where markets were eventually heading but just a little bit quicker than expected,” Stephen Innes, chief global markets strategist at Axi said in a note on Tuesday. The cold weather in the United States halted Texas oil wells and refineries on Monday and forced restrictions on natural gas and crude pipeline operators. The rare deep freeze prompted the state’s electric power suppliers to impose rotating blackouts, leaving nearly 3 million homes and businesses without power. Texas produces roughly 4.6 million barrels of oil per day and is home to 31 refineries, the most of any U.S. state, according to Energy Information Administration data, including some of the country’s largest. In the Middle East, Yemen’s Iran-aligned Houthi group said on Monday it had struck Saudi Arabia’s Abha and Jeddah airports with drones. The Saudi-led coalition fighting the Houthis in Yemen said early on Monday morning it had intercepted and destroyed an explosive-laden drone fired by the Houthis toward the kingdom. The World Health Organization (WHO) on Monday listed AstraZeneca and Oxford University’s COVID-19 vaccine for emergency use, widening access to the relatively inexpensive shot in the developing world. Capping prices gains, Norway’s oil industry employers struck a wage bargain with the Safe labour union on Tuesday, preventing a strike at the Mongstad crude terminal and shutdowns of major offshore oil and gas fields.
Oil steady amid Texas supply disruptions, potential OPEC+ moves — Oil extends rally on Texas supply disruptions – Oil prices rose on Wednesday, underpinned by a major supply disruption in the southern United States this week where a winter storm hit Texas. Benchmark Brent crude gained 22 cents, or 0.35%, to trade at $63.56 per barrel. U.S. West Texas Intermediate (WTI) crude rose 15 cents, or 0.28%, to $60.22 per barrel. Both contracts were at their highest level since January 2020. “WTI clocked in at $60 a barrel this week, joining its transatlantic peer (Brent) above the psychological level for the first time since January 2020. At this price point, any oil production is profitable,” Oil has been supported in the past few weeks by OPEC+ supply curbs and hopes of a demand rebound due to COVID-19 vaccinations, but severe cold weather in Texas, the country’s largest oil producing state, has boosted the prices in recent days. The U.S. deep freeze is expected to disrupt production for several days if not weeks, industry experts said, as wellheads have frozen and refineries have been shut. ANZ and Citigroup analysts estimated at least 2 million barrels per day (bpd) of U.S. shale oil production had been curtailed. Citi estimated a cumulative production loss of around 16 million barrels through early March. The stronger price environment has put more attention on OPEC+, which groups OPEC, Russia and allied producers. It meets to set policy on March 4. “The impact on crude oil prices will largely depend on how long the power crisis will last, but eventually prices will likely return to the fundamentals with a focus on the global energy demand and OPEC+,” OPEC+ oil producers are likely to ease curbs on supply after April given a recovery in prices, OPEC+ sources told Reuters. “We believe that OPEC+ will likely take a more conservative approach, and ease output more modestly,” . U.S. oil inventory data from the American Petroleum Institute and the U.S. Energy Information Administration (EIA) will be released on Wednesday and Thursday respectively, a one day delay for each after this week’s U.S. holiday. Analysts polled by Reuters estimated, on average, that crude stocks fell 2.2 million barrels in the week to Feb. 12.
Oil jumps US$1/barrel as Texas freeze prompts US output drop,– Oil prices gained more than US$1 a barrel on Wednesday, as frigid Texas temperatures shut production across the largest US crude producing state, with the unusually cold weather expected to hamper output for days or even weeks. Brent crude settled at US$64.34 a barrel, gaining 99 cents, or 1.6 per cent, while US West Texas Intermediate (WTI) crude settled at US$61.14 a barrel, rising US$1.09, or 1.8 per cent. Both benchmarks were at their highest levels since January last year. Oil has been supported by Opec+ supply curbs, Saudi Arabia’s additional cuts and hopes of a demand rebound due to Covid-19 vaccinations. Historic cold weather since the weekend in Texas, which supplies the bulk of US crude and is part of the main US refining hub, has propelled prices even higher. The US deep freeze has shut an estimated 1 million barrels a day of production and is expected to disrupt production for several days if not weeks, industry experts said, as wellheads have frozen over and pipelines have shut. At least a fifth of US refining output has been knocked offline, which is hampering demand for crude at the same time production is down,. “This will all thaw out and things should ramp up rather quickly,” he said. In a statement that helped ease fears that Opec and allied oil producers would announce plans to raise output after meeting next month, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said it was too early to declare victory against the Covid-19 virus and oil producers must remain “extremely cautious.” The stronger price environment has put more attention on Opec+, which groups Opec, Russia and allied producers. It meets to set policy on March 4. US crude oil stocks fell by 5.8 million barrels in the week to Feb 12 to about 468 million barrels, compared with analysts’ expectations in a Reuters poll for a draw of 2.4 million barrels, American Petroleum Institute data showed.
Oil Prices Advance Amid US Energy Crisis | Rigzone — Oil rose to the highest in over a year as U.S. oil output plunged by a record 40% amid the ongoing energy crisis in the country. Futures climbed 1.8% in New York after flipping between gains and losses earlier on Wednesday. The deep freeze causing historic power outages across the central U.S. has led oil output to fall by more than 4 million barrels a day nationwide. Meanwhile, Brent’s nearest contract is trading at its strongest premium to the following month in over a year, with North Sea traders this week frantically bidding for the region’s cargoes as replacements are sought for U.S. crude exports. However, a spate of refinery outages from the freezing temperatures has curbed demand for crude in the U.S., while gasoline consumption also decreased as the cold kept even more Americans off the road. WTI’s nearest time spread flipped back into a bearish contango structure this week amid refinery closures and infrastructure issues associated with the freeze in the U.S., indicating oversupply. “This arctic blast is really delivering a key surprise that’s elevating prices,” “The short-term disruption underlines the fragility of where we are with supplies, and we could see a number of different events that could provide us with another surge higher.” Crude’s rally faded briefly during Wednesday’s session after Dow Jones reported that Saudi Arabia plans to boost oil output in the coming months, citing unnamed advisers to the kingdom. While Saudi Arabia’s unilateral supply cuts this year came as a surprise to the market when initially announced, many investors had expected the producer to raise output come April. Meanwhile, Saudi Arabia is urging fellow members of the OPEC+ alliance to remain cautious as they prepare to consider further supply increases. West Texas Intermediate for March delivery rose $1.09 to settle at $61.14 a barrel. Brent for April settlement gained 99 cents to end the session at $64.34 a barrel. Both benchmarks are at the highest since January 2020 Temperatures in Texas are now low enough to freeze oil and gas liquids at the well head and in pipelines laid on the ground. Before the crisis, the U.S. was pumping about 11 million barrels a day, according to government data. Production in the Permian Basin alone — America’s biggest oil field — has plummeted by as much as 80%. A slew of crude pipelines were also shut earlier this week due to the freeze, including those that transport oil from the nation’s largest storage hub at Cushing, Oklahoma, to the U.S. Gulf Coast, according to data-provider Genscape Inc. Multiple pipelines remained offline as of Tuesday.
WTI Extends Gains After Bigger Than Expected Crude Draw — Oil prices ended a roller-coaster day higher (WTI above $61) after the deep freeze shut in a stunning 40% of US crude production (prices higher), headlines reported that the Saudis plan to boost production going forward (prices dived), and a late-day buying panic post-FOMC Minutes (ignoring transitory inflation factors). “We’re at a very delicate point here,” said Bob Yawger, head of the futures division at Mizuho Securities. OPEC+ has “to make sure the associated demand is there before increasing the barrels and not kill the golden goose here, which is what they’ll do if they add everything at once.” Today’s reported inventory data is unlikely to show any of the affects from the current storm (although potentially some stockpiling may have occurred)… API
- Crude -5.8mm (-2.15mm exp)
- Cushing -3.00mm
- Gasoline +3.90mm (+1.397mm exp)
- Distillates -3.50mm (=1.57mm exp)
As analysts expected, crude stocks drew down for a 4th straight week (and more than expected). Gasoline stocks rose for the 6th week of the last 7… WTI was hovering around $61.20 (highs of the day) ahead of the API print, and extended gains after the bigger than expected draw… “This arctic blast is really delivering a key surprise that’s elevating prices,” said Edward Moya, senior market analyst at Oanda Corp. “The short-term disruption underlines the fragility of where we are with supplies, and we could see a number of different events that could provide us with another surge higher.”
Saudi Arabia May Reverse Course, Respond to Rise in Oil Prices with Increased Production –Saudi Arabia, which leads the Organization of the Petroleum Exporting Countries (OPEC), may quickly ramp up production this spring, following the recent momentum in oil prices and its own expectations for increased demand in the second half of 2021. It would mark a stark shift from its current stance. OPEC and its allies, aka OPEC-plus, this month maintained lower near-term production targets. The cartel had previously called for its members to keep supply levels steady this month, with the exception of leader Saudi Arabia. The kingdom agreed to voluntarily trim output by 1.0 million b/d in February and March to further align global supply with demand that has been under pressure from pandemic fallout. [NGI’s natural gas price indexes have included trade data from both price reporters and the Intercontinental Exchange (ICE) since 2008. Find out more about our price index data here.] Saudi Arabia, however, is preparing a plan to reverse course in April and could announce the shift in policy when OPEC-plus meets early next month, the Wall Street Journal reported Wednesday, citing advisers to the cartel. Oil prices reached 13-month highs in recent days. The Saudis’ plan had not otherwise been made public or formally communicated to OPEC delegates. Saudi Arabian Energy Minister Prince Abdulaziz bin Salman, while speaking at a virtual conference on Wednesday, said it was too soon to assess with confidence the trajectory of the pandemic or to make any new announcements. “We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he said. “Those who are trying to predict the next move of OPEC-plus, to those I say, don’t try to predict the unpredictable.” Virus outbreaks during the winter months have kept travel in check and, by extension, muted demand for gasoline and jet fuel. OPEC-plus ministers are scheduled to meet March 4 to determine output quotas for April and potentially ensuing months.
JPMorgan says two factors could drive up oil prices by another $5 to $10 per barrel – JPMorgan says crude prices could see further upside ahead as oil continues to see strong gains so far this year. It comes against the backdrop of an improving global outlook as major economies press ahead with their ongoing coronavirus vaccination campaigns. “I think there’s room for oil prices to move a little bit higher in this environment but, you know, not thinking about a price of $80 or $90 a barrel. Maybe it goes up by $5 or $10 more from here,” Kerry Craig, global market strategist at JPMorgan Asset Management, told CNBC’s “Street Signs Asia” on Friday. In the afternoon of Asia trading hours on Friday, international benchmark Brent crude futures were at $62.91 per barrel. U.S. crude futures changed hands at $59.34 per barrel. Both Brent and West Texas Intermediate crude futures have risen more than 20% each so far in 2021. Oil prices have moderated in recent days after surging to their highest in more than a year. Just this week, a deadly winter storm in southern U.S. resulted in days of power outages in Texas, wrecking havoc on the state’s energy infrastructure and taking millions of barrels per day of oil production offline. Energy prices popped as a result of that development. There are two things that will likely drive oil prices going forward, according to Craig. Firstly, demand for oil is expected to pick up as the global economy recovers from the hit of the coronavirus pandemic, he said. However, that will be “curtailed to a certain extent” due to the low likelihood of international travel coming back in a big way soon. Travel is an “important source of demand,” he added. On the supply side, he said: “We’re still relying on those OPEC+ members to keep that supply relatively curtailed and I think there’s still a question about that in terms of the amount of supply coming on relative to demand.” OPEC and its allies, known collectively as OPEC+, have sought to navigate their way through a historically tumultuous period that has included an unparalleled collapse in oil prices as well as a major fuel demand shock amid the pandemic.
WTI Rebounds Above $61 After Big Crude Draw, Production Drop – Oil prices are lower this morning ahead of the official inventory data (after spiking on Permian shut-ins and a bigger than expected crude draw reported by API) as stocks sank: “The outage will be temporary but it will still help to accelerate U.S. oil inventories down towards the five year average quicker than expected,” Estimates for how long the U.S. outages may last have risen in recent days as analysts try to figure out the timespan involved in thawing out infrastructure.One million barrels per day of production are offline due to the winter storm, according to Wood Mackenzie analysts. At least 6% of Permian Basin production was hit by freezing weather, and 225,000 barrels per day of Eagle Ford production. Meanwhile, Citigroup analysts have estimated a cumulative production loss of 16 million barrels through early March. This week’s inventory data is unlikely to reflect any effects of the storm (except the possibility of some stockpiling ahead of it). DOE
- Crude -7.257mm (-2.15mm exp)
- Cushing -3.028mm
- Gasoline +672k (+1.397mm exp)
- Distillates -3.422mm (-1.57mm exp)
After API’s big draw, analysts expected 9th weekly drop in crude stocks in the last 10 weeks and were right as crude inventories dropped a far greater than expected 7.25mm barrels. Gasoline stocks rose for the 6th week in the last 7…
Oil prices dip after surpassing $65 a barrel amid Texas cold snap –Oil prices fell on Thursday despite a sharp drop in United States crude inventories, as market participants took profits following days of buying spurred by a cold snap in the largest US energy-producing state. Brent crude fell 41 cents, or 0.6 percent, to settle at $63.93 a barrel. During the session it rose as high as $65.52, its highest since January 2020. US West Texas Intermediate (WTI) crude futures fell 62 cents, or 1 percent, to settle at $60.52 a barrel, after earlier reaching $62.26, the highest since January 2020. Brent had gained for four straight sessions before Thursday, while WTI had risen for three. “The market probably got a little bit ahead of itself,” said Phil Flynn, a senior analyst at Price Futures Group in Chicago. “But make no mistake, this selloff in oil doesn’t solve the problems. The problems are going to persist.” Though some Texas households had power restored on Thursday, the state entered its sixth day of a cold freeze. It has grappled with refining outages and oil and gas shut-ins that rippled beyond its border into Mexico. The weather has reduced the nation’s refining capacity by one-fifth and closed oil and natural gas production across the state. “The temporary outage will help to accelerate US oil inventories down towards the five-year average quicker than expected,” SEB chief commodities analyst Bjarne Schieldrop said. Prices dropped despite a decrease in US oil inventories. Crude stockpiles fell by 7.3 million barrels in the week to February 12, the Energy Information Administration (EIA) said on Thursday, compared with analysts’ expectations for a decrease of 2.4 million barrels. Crude exports rose to 3.9 million barrels per day, the highest since March, EIA said. “The big nugget was the big jump in exports of crude oil,” said John Kilduff, partner at Again Capital in New York. “We’ll have to see what happens with that next week [related to] weather in Texas, but I have been looking for a pickup there for a while.” Oil’s rally in recent months has also been supported by a tightening of global supplies, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the OPEC+ grouping, which includes Russia. OPEC+ sources told Reuters news agency that the group’s producers are likely to ease curbs on supply after April given the recovery in prices.
Oil Prices Dip as Some Cash in on US ‘Freeze’ Trade – The one-way move in oil prices snapped on Thursday as some cashed in on this week’s “freeze” trade that sent crude markets higher than they might have otherwise gone. New York-traded West Texas Intermediate crude settled down 1%, or 62 cents, at $60.52 per barrel as players took profit on its run to 13-month highs of $62.27 after the Arctic freeze that crippled part of the oil production in Texas, the heartland of U.S. energy. London-traded Brent, the global benchmark for crude, settled down 0.6%, or 41 cents, at $63.93, after briefly breaking above $65 – its highest since January 2020. After an unseasonably warm start to the 2020/21 winter, a hail of snow storms have descended upon central and eastern United States in recent weeks. This has slowed or, in some cases, shut altogether energy production in some places, particularly in Texas, where the freeze was so severe this week that oil and gas just couldn’t flow like normal. Analysts at ANZ Bank and Citigroup (NYSE:C) estimate that at least 2 million barrels barrels per day of US shale oil production has been curtailed by the Texas storm. Citigroup also expects a cumulative production loss of around 16 million barrels through early March. Typically known for its sweltering weather most of the year, Texas now looks more like a white blanket after this week’s storm in the state known temperatures of between 60 degF (15.6 degC) and 70 degF (21.1 degC). At least 500,000 homes in Texas had no power on Thursday morning after as many 3.1 million were impacted a day earlier by the worst snowstorm in 30 years to hit the state.
Oil drops as investors gauge big chill impact on U.S. refineries –Oil prices slid as much as 2% in early trade on Friday, adding to overnight declines, on worries that refineries shut by a big freeze in the U.S. South will take some time to revive operations and dent crude demand. U.S. West Texas Intermediate (WTI) crude futures fell $1.21, or 2%, to $59.31 a barrel at 0157 GMT, after declining 1% on Thursday. Brent crude futures dropped $1.07, or 1.7%, to $62.86 a barrel, after declining 0.6% on Thursday. Both benchmark contracts rallied to 13-month highs on Thursday driven by the historic freeze in U.S. southern states. While analysts estimate the extreme cold has shut in as much as one-third of U.S. crude production, attention has now turned to the impact on refiners. “The market is concerned about the refinery outages in Texas, where arctic weather has caused power outages and frozen wells and pipes,” ANZ Research said in a note. The lack of demand from refineries will likely lead to builds in crude stocks over coming weeks, even though around 3.5 million barrels per day (bpd) of U.S. oil output has been shut, ANZ said. Citi analysts said in a note that some U.S. refineries might bring forward maintenance work normally scheduled for the spring, ahead of the summer driving season. “Refinery outages could be deeper and longer lasting, especially ahead of the spring maintenance season, as some plants could decide to anticipate planned turnarounds of roughly 500-k b/d on aggregate over the next month,” Citi analysts said. U.S. crude stockpiles fell more than expected in the week to Feb. 12, before the freeze, with inventories down by 7.3 million barrels to 461.8 million barrels, their lowest since March, the Energy Information Administration reported on Thursday.
Light Crude Ends Week Below $60 | Rigzone — Oil fell to the lowest in a week as output slowly resumed in Texas, while margins for processing gasoline surged as Gulf Coast refineries are seen taking weeks to restart operations after the deep freeze. Crude futures in New York plunged $1.28 on Friday, its biggest decline in dollar terms since late December. Producers including Marathon Oil Corp. are using restored power from grids or generators to resume output that was halted by the frigid weather this week in the Eagle Ford shale basin. Meanwhile, fuel margins jumped with four of the biggest refineries in Texas seen taking several weeks to resume operations, raising the potential for fuel shortages. “Crude production is going to come back up a lot faster than refineries, leaving more crude available than there will be demand for it coming up over the next few weeks.” Oil is still up more than 20% this year due to Saudi Arabia’s unilateral output cuts in February and March and an improving demand outlook. The market largely expects Saudi Arabia to roll some of the output cuts back, “but how much they try and bring back is the question mark we’re all waiting for,” said Gary Cunningham, director at Stamford, Connecticut-based Tradition Energy. “We don’t see them discontinuing the cut entirely. We still haven’t seen the recovery in global demand, even though there’s all kinds of positive outlooks.” West Texas Intermediate fell $1.28 to settle at $59.24 a barrel, falling less than 1% over the week. Brent for April settlement slipped $1.02 to end the session at $62.91 a barrel, posting its largest daily drop since Jan. 15. The contract eked out a slight weekly gain. Gasoline futures rose by 1.26 cents per gallon to $1.8069. The refining margin for Nymex gasoline versus WTI futures surged as much as over 16% on Friday, rising to the highest since April. There should be only a small and transitory impact on global oil prices from the U.S. freeze as the supply and demand impacts balance out, Goldman Sachs Group Inc. said. Still, Brent’s nearest timespread remains at one-year highs in a structure indicating tighter supplies and WTI’s discount to Brent has widened further past $3 a barrel this week, as replacements are sought for U.S. crude exports.ng The cold snap and power cuts affected more than 20 refineries in Texas, Louisiana and Oklahoma. Crude-processing capacity fell by about 5.5 million barrels a day, said Amrita Sen, chief oil analyst for Energy Aspects Ltd. Meanwhile, the White House said it would be willing to meet with Tehran to discuss a “diplomatic way forward” in efforts to return to the nuclear deal that the U.S. quit in 2018, adding further pressure to prices. Iran is pressing the U.S. to lift sanctions and rejoin the deal if talks are to resume.
A shot at Dubai? Saudi Arabia issues dramatic ultimatum to pull global head offices into the kingdom – Saudi Arabia, in a bold and unexpected move, announced late Monday that by 2024 its government would cease doing business with any international companies whose regional headquarters were not based within the kingdom. The news has investors, bankers and expat workers buzzing – and scratching their heads. Saudi Arabia in recent years has pitched itself as a location for HQ offices in its campaign to create private sector jobs and diversify its economy as part of Crown Prince Mohammed bin Salman’s Vision 2030. But what began as a pitch to global head offices has now become an ultimatum for some: either relocate your headquarters to the kingdom, or lose out on lucrative government contracts. And the move, regional analysts and finance professionals say, appears to be targeted at the region’s current headquarters hub: Dubai. “The Kingdom of Saudi of Arabia intends to cease contracting with companies and commercial institutions with regional headquarters not located in the Kingdom. The cessation will include agencies, institutions and funds owned by the government and will take effect January 1st, 2024,” Saudi state agency SPA reported on Monday. So far, the policy appears only to apply to firms doing business with the government; those that don’t move their head offices to Saudi Arabia can still work in the private sector. Riyadh vs. Dubai The Saudis are “trying to lure companies out of Dubai, I expect, and elsewhere,” Ryan Bohl, a Middle East analyst at risk consulting firm Stratfor, told CNBC. One UAE-based financier, who spoke anonymously due to having business operations in Saudi Arabia, described the move as “clearly targeting the UAE” and a “jab in the face” to Dubai. “It’s a terrible decision,” the financier, a longtime veteran of the region, added. “It’s anti-common market, it’s anti-competition, and it’s essentially corporate bullying.”
After Qatar, Belligerent Saudi Takes on the UAE — Will the world go to Riyadh if coerced to do so by the Saudi government? Upon taking power, Crown Prince Mohammed bin Salman was seen as a reformist, market-friendly leader able to take Saudi Arabia forward into a post-fossil fuel future. This impression has taken a big hit in recent years with the 2017 embargo on Qatar as well as the still-unresolved 2018 murder of journalist Jamal Khashoggi at Saudi Arabia’s Turkish consulate. Taking endless potshots at its fellow Gulf Cooperation Council (GCC) members doesn’t seem to be the way to signal that Saudi Arabia is open for business. More recently, Saudi Arabia has come up with its most outlandish power play yet: It has cautioned multinationals that, unless they place their regional (read: Middle East) headquarters in Saudi Arabia, they will not be able to ink government contracts. Obviously aimed at Dubai in the UAE which vastly outstrips Saudi Arabia in “ease of doing business” indicators that you would naturally think companies would gravitate to when siting regional headquarters, the outcry has been understandably strong: Saudi Arabia, in a bold and unexpected move, announced late Monday that by 2024 its government would cease doing business with any international companies whose regional headquarters were not based within the kingdom. The news has investors, bankers and expat workers buzzing – and scratching their heads. Saudi Arabia in recent years has pitched itself as a location for HQ offices in its campaign to create private sector jobs and diversify its economy as part of Crown Prince Mohammed bin Salman’s Vision 2030. But what began as a pitch to global head offices has now become an ultimatum for some: either relocate your headquarters to the kingdom, or lose out on lucrative government contracts. And the move, Middle East analysts and finance professionals say, appears to be targeted at the region’s current headquarters hub: Dubai. Mind you, the UAE joined Saudi Arabia in the embargo on Qatar. Although regional economic rivalry is expected, punching below the belt in this way over restricting government procurement lest they headquarter in Saudi Arabia is widely perceived as unfair, especially since they are all supposedly part of a customs unionin the GCC: The Saudis are “trying to lure companies out of Dubai, I expect, and elsewhere,” Ryan Bohl, a Middle East analyst at risk consulting firm Stratfor, told CNBC. One UAE-based financier, who spoke anonymously due to having business operations in Saudi Arabia, described the move as “clearly targeting the UAE” and a “jab in the face” to Dubai. The truth of the matter is that Saudi Arabia is a less attractive place to site your regional HQ with its more restrictive environment–economically and socially. The latter is of particular concern to Western expats:
Over 700 detained after Turkish invasion of Iraq targets PKK — Yesterday, the Turkish Interior Ministry announced that 718 people, including officials and members of the legal Kurdish nationalist Peoples’ Democratic Party (HDP), have been detained as part of “terror operations” carried out in 40 different cities across the country. As part of an already advanced drive towards dictatorship that is eliminating basic democratic rights and constitutional guarantees, this state crackdown launched by President Recep ErdoÄŸan’s Justice and Development Party (AKP) government is a massive witch-hunt aimed at suppressing any kind of opposition. It is unprecedented in its scope since the NATO-backed attempted military coup in 2016. These police operations came immediately after Defense Minister Hulusi Akar’s announcement Sunday that 13 Turkish nationals, including soldiers and police officers, were killed by the Kurdistan Workers’ Party (PKK) in the mountainous Gara or Gare region of the Iraqi Kurdistan Regional Government (KRG) during a recently launched Turkish military invasion. They had reportedly been held as prisoners by the PKK since 2015. After this announcement, a feverish government and media campaign was unleashed, blaming the HDP for deaths. Meanwhile, the HDP had announced on Saturday that at least 143 of its members had been detained over the past two days. According to Defense Minister Akar, “It has been established that one of our innocent and unarmed citizens was shot in the shoulder, and the remaining 12 were shot in the head. They were killed in a cave where the Turkish forces arrived to carry out a search.” He also said that the operation, conducted in a 75 kilometers-wide and 25 kilometers-deep area in Iraq, had been successfully concluded. “With the operation, all the elements that had been settled in this area and were preparing to attack our borders, security forces and people have almost been eliminated,” he said. Three Turkish soldiers and 48 PKK militia members lost their lives in the military clash, according to Akar. The Defense Ministry had announced last Wednesday that it had launched a new military invasion dubbed Operation Eagle Claw 2 into northern Iraq targeting PKK forces on the ground, claiming that there was a growing threat against Turkey from a PKK presence in the area. Dozens of warplanes and drones were used in the military operation, along with ground forces deployed to the area by helicopter.
Turkey Summons US Ambassador As Erdogan Blasts Biden’s Support For “Kurdish Terrorists” Turkey’s President Recep Tayyip Erdogan is once again blasting what he’s deemed US support of “terrorists” after a major incident in which Kurdish militants reportedly executed 13 kidnapped Turks in northern Iraq. Ankara on Monday summoned the US ambassador to express outrage at the lukewarm American statement on the killings which appeared to question the credibility of the Turkish claims. “The United States said it stood by fellow NATO member Turkey and that it condemned the killings if it was confirmed that responsibility lay with the PKK,” according to a Reuters summation of the State Department statement. Erdogan and top officials were outraged, with the president in a speech before AK Party supporters calling the US official stance “a joke”and “ridiculous”. “Now there is a statement made by the United States. It’s a joke. Were you not supposed to stand against the PKK, the YPG? You clearly support them and stand behind them,” Erdogan said, enraged by what’s being perceived as US skepticism over Turkey’s version of events. The summary execution allegation against the outlawed Kurdistan Workers Party (PKK) was leveled on Sunday, and included claims the PKK had killed Turkish military and police which had been previously captured. Turkish officials described some of its forces were captured on Feb.10 during an operation against Kurdish militants in which 48 PKK members were killed. Below is the US statement that Erdogan accused of being intentionally weak: “We stand with our NATO Ally Turkey and extend our condolences to the families of those lost in the recent fighting. The United States deplores the death of Turkish citizens in the Kurdistan Region of Iraq,” U.S. State Department spokesperson Ned Price said in a statement.Price said that if reports that the PKK was responsible were confirmed, they “condemn this action in the strongest possible terms.”Erdogan was visibly angry in a Monday speech he gave to supporters at an event in a coastal Black Sea town: Tensions between the US and Turkey have already been on edge for years given the US backing for the Kurdish-led Syrian Democratic Forces (SDF) in northern Syria. Addressing this, Erdogan continued: “If we are together with you in NATO, if we are to continue our unity, then you will act sincerely towards us. Then, you will stand with us, not with the terrorists.”
Rocket attack on US base in Iraq underlines continued Middle East militarism under Biden -A rocket attack Monday on the heavily fortified American military base in Erbil, the capital of Iraqi Kurdistan, has underlined the continued US intervention in the Middle East under the Democratic administration of President Joe Biden. The attack, which killed one military contractor, initially identified as a Syrian Kurd, and wounded nine others, including an American soldier, came as the Pentagon is formally evaluating US troop deployments in the Middle East and Afghanistan. US Secretary of State Antony Blinken declared Washington “outraged” by the attack. Tehran, meanwhile, angrily refuted allegations that Iran was in any way involved in the rocket strike. A little-known group calling itself Saraya Awliya al-Dam, or Guardians of the Blood Brigade, claimed responsibility for Monday’s attack. A wall is damaged in a residential complex after rockets attack in Irbil, Iraq, Tuesday, Feb. 16, 2021.(AP Photo/Salar Salim) A similar attack on a US base in Iraq last December led to a spiral of US retaliation that included the bombing of Iraqi Shia militia positions and the criminal US drone strike assassination of senior Iranian leader Qassem Suleimani and a top Iraqi militia leader at Baghdad international airport last January. While in the course of his election campaign, Biden criticized this assassination and promised to “end the forever wars in Afghanistan and the Middle East,” there is no indication of any move toward a de-escalation of American militarism in the region. In a press conference last Friday, Pentagon spokesman John Kirby said that the ongoing review of US deployments was aimed at assuring “that we have a robust enough deterrent capability in the Middle East,” including “both the fixed and the rotational capabilities in the region to deal with the threats that are posed by Iran.” Officially, Washington has 2,500 troops deployed in Iraq and approximately 900 in Syria, along with 2,500 more in Afghanistan. The real US military footprint is undoubtedly far larger, however. The Pentagon stopped releasing figures on the number of uniformed forces and military contractors deployed in the three countries in 2017 on the order of the Trump White House. Moreover, other military units are rotated in and out of the war zones on a regular basis. Meanwhile, as many as 40,000 more troops are deployed across the region at US military bases in Kuwait, Qatar, Bahrain, the United Arab Emirates, and other countries. US aircraft carrier strike groups have carried out continuous threatening maneuvers in and near the Persian Gulf, while the Biden administration has continued menacing Iran with the overflight of the region by B-52 Stratofortress heavy bombers.
In Major Nuke Deal Breakthrough, Biden Tells Iran ‘We’re Ready For EU-Sponsored Talks’ –A first potential major breakthrough which so far has proved elusive after Biden has stalled on prior promises to ‘immediately’ restore US participation in the Iran nuclear deal, the United States appears to have just changed its tune. An admin official has said ‘maximum pressure’ could come to an end if Iran agrees to engage through a broader EU-hosted meeting base in the P5+1 framework. “The United States would be ready to hold talks with Iran if the European Union extended an invitation, a senior U.S. official said on Thursday, sketching out a possible diplomatic path to restore the 2015 Iran nuclear deal,” Reutersreports late in the day Thursday. Further the official said the administration’s “goal is to get both sides back into compliance with the nuclear deal” and has extended the invitation to Iran: “Let’s talk about how to get there.”Previously the administration appeared to balk when initially just such an offer was made two weeks ago by Iranian Foreign Minister Javad Zarif for the European Union to coordinate a piecemeal approach for dropping sanctions and Iran’s return to conformity. But now Reuters has cited a top admin official to say “We are ready to show up if such a meeting were to take place” – in what’s clearly an invitation for Iran to signal the same. Iran has indicated it will begin blocking IAEA inspectors from its nuclear facilities starting Sunday, February 21st, hence this new scramble out of the Biden administration to find a way forward before this next escalation measure that many fear would be hard to roll back takes effect. Both the US and Europe are warning against such a step.The US has lately been in direct talks with allies Britain, France, and Germany – the key European signatories to the JCPOA – and it appears they’ve finally struck up a common strategy in getting the frozen communications between Tehran and Washington going again.
NATO summit stresses anti-China strategy as wars in Middle East, Afghanistan continue – The two-day NATO defense ministers meeting that concluded Thursday was marked by the attempt of the Biden administration and its defense secretary, retired General Lloyd Austin, to adopt a new “tone and approach, a desire to work with our allies and partners,” as a senior Pentagon official put it. Whatever the claims that “America is back” after the four years of Donald Trump, the US used the meeting, held via a secure videoconference because of the pandemic, to press for the same essential policies: continued imperialist operations in the Middle East and a strategic shift toward the preparations for “great power” confrontation with China and Russia. This was combined with a continuation of Washington’s insistence that the European powers devote a greater share of their budgets – two percent of GDP – to military spending, including buying American-made hardware, a demand that has remained consistent from Obama to Trump to Biden. The most pressing immediate issue confronting NATO, a May 1 withdrawal deadline for 10,000 NATO and allied troops occupying Afghanistan, was left unresolved, waiting for a decision to be made in Washington. The deadline is part of the peace agreement signed last year in Qatar between the US and the Taliban, which was supposed to trade the withdrawal of US and other foreign troops for the Taliban’s commitment to denying the use of Afghan soil to Al Qaeda or any other forces seeking to attack the US and its allies. In the year since the negotiation of the accord, not a single US soldier has been killed in the country. Now, the Pentagon is claiming that the level of “violence” in the country makes it impossible to move forward. The US-backed security forces of the puppet regime in Kabul are facing a debacle, giving up bases and checkpoints to the Taliban, which is encircling major regional capitals. The insurgent movement’s traditional spring offensive is still to come. While European forces account for the majority of the foreign troops still in Afghanistan – officially, the US has only 2,500 soldiers deployed in the country – the occupation is wholly dependent upon US airpower, supply lines and logistical support.
Biden team a takes major step in offering to start talks with Iran as Tehran’s sanctions deadline approaches – Iran and the U.S. are in a standoff. President Joe Biden’s administration wants to revive the 2015 nuclear deal, but is demanding to see changes from Tehran before it will lift the heavy sanctions imposed on the country by the Trump team. Meanwhile, Iran says it wants Washington to step up its game and make the first move, refusing to budge until those sanctions are lifted. But the Biden administration on Thursday took a major step, joining with European partners in offering to begin talks with the Iranians for the first time in four years. “The United States would accept an invitation from the European Union High Representative to attend a meeting … to discuss a diplomatic way forward on Iran’s nuclear program,” State Department spokesman Ned Price said in a statement. The Biden team also rescinded the former Trump administration’s efforts to reimpose U.N. sanctions on Iran. Secretary of State Antony Blinken told European ministers in a call Thursday that it would work with them to restore the 2015 accord, which he described as “a key achievement of multilateral diplomacy,” according to a New York Times report. It remains unclear whether Iran will agree to the talks. Iran previously set a deadline of Sunday, Feb. 21, vowing that if oil and banking sanctions are not lifted by then, it will expel the U.N.’s nuclear inspectors from the country, ending outside access to its facilities. The political brinkmanship raises questions over Biden’s plans to salvage a deal which has effectively been on life support since former President Donald Trump pulled the U.S. out of it in 2018. The Iranian nuclear deal, also called the Joint Comprehensive Plan of Action (JCPOA), was spearheaded by the Obama administration and involved several other world powers. It lifted international sanctions on Iran, offering the country of 83 million economic relief, in exchange for curbs to its nuclear program, which included mandated inspections by the U.N.’s International Atomic Energy Agency (IAEA). Any removal of IAEA inspectors “would make an agreement much more difficult to achieve; without mechanisms for monitoring Iran’s nuclear program, mistrust from the U.S. and the remaining parties to the JCPOA would deepen,” Torbjorn Soltvedt, principal MENA analyst at Verisk Maplecroft, wrote in a research note this week.#160;
Iran, Russia and China launch joint naval exercises in Indian Ocean -On February 16, as NATO prepared its summit to prosecute “strategic rivalry” with Russia and China, Iranian and Russian warships launched ongoing naval drills in strategic waters of the Indian Ocean, south of Iran and the oil-rich Persian Gulf. They are to soon be joined by Chinese warships which were reportedly delayed by the Chinese New Year festival. The drills highlight the global war tensions that are at explosive levels as the Biden administration takes office. These are the second such exercises, continuing a format inaugurated by joint Iranian-Russian-Chinese “Maritime Security Belt” naval drills held in December 2019. Shortly afterwards, Washington ordered the brazen assassination of top Iranian General Qassem Soleimani, who was murdered in a US drone strike at the Baghdad airport on January 3, 2020. A warship sails while approaching Iran’s southeastern port city of Chahbahar, in the Gulf of Oman. Iran’s navy on Friday kicked off the first joint naval drill with Russia and China in the northern part of the Indian Ocean. (Iranian Army via AP) This year’s Iranian-Russian-Chinese exercises take place as Iran’s economy reels under the impact of US sanctions and the COVID-19 pandemic. As he maintains devastating financial sanctions that Trump imposed on Iran after unilaterally scrapping the 2015 Iranian nuclear treaty, Biden ordered last month a provocative flyover of the Persian Gulf by a lone B-52 Stratofortress bomber escorted by Saudi F-15 fighter jets. The Iranian-Russian-Chinese drill underscores that with its threats against Iran, Washington is prosecuting a far broader, global conflict that threatens to erupt into war. This drill comes shortly after the larger Malabar 2020 naval exercise in November with US, Indian, Japanese and Australian ships including aircraft carriers USS Nimitz and INS Vikramaditya. This joint naval mobilization of the so-called “Asian Quad” of US allies was, as Voice of America reported citing Indian naval spokespersons, an “effort to contain China.” Shortly after these exercises, top Iranian nuclear scientist Mohsen Fakhrizadeh died on November 27, near Tehran, in what US intelligence officials described as an Israeli assassination. Iran’s Navy Chief Rear Admiral Hossein Khanzadi announced that the current drill aims to “ensure collective security in the region and in the northern Indian Ocean.” Khanzadi implied that the drill aims to expel US influence from the region: “It means that global arrogance which until today dominated the region must realize that it needs to leave it.” While Khanzadi also initially reported that Indian warships would join the joint exercise, Indian navy officials subsequently denied that India is participating in the exercises.
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