Romania LNG Stations Hit By Deadly Explosions

By Alex Kimani - Aug 28, 2023

The Prefect of the Municipality of Bucharest has ordered checks on all 380 fuel and liquefied gas LNG stations in Bucharest, after two explosions on Saturday at an LNG station in Crevedia resulted in two deaths and dozens of injuries. The second explosion occurred during the intervention of firemen leaving two people dead and another 41 hospitalized. Some 27 firefighters were admitted to the Floreasca Emergency Hospital, several  in critical condition, while another eight patients were transported to specialist hospitals in Germany and Austria.

Initial investigations have determined transshipment from one tanker to another as the cause of the explosions while other tankers had technical problems. According to the National Agency for Environmental Protection, ANPM, the former LNG station at Crevedia should have been decommissioned in 2020 since its environmental license expired and it was not renewed. 

“We will assess the damage and provide support from the government’s reserve fund. I want to be very clear: all those directly or morally responsible for this tragedy will pay, regardless of who they are and what positions they hold. The law must be applied to the letter,” Prime Minister Marcel Ciolacu wrote on his Facebook page on Sunday.

This year has witnessed several major accidents occur at oil and gas facilities. Earlier in the year, China's Panjin Haoye Chemical Co Ltd’s entire oil refinery and petrochemical complex was shut down after a huge explosion killed five people and left eight missing. According to Chinese state television, the explosion occurred when the plant was undergoing maintenance work at an alkylation facility. Xu Peng estimated that the Haoye facility was processing at 62.5% of its crude refining capacity of 130,000 barrels per day (bpd).

Back in June, two oil tankers collided in the Irkutsk region in Russia thanks to a captain operating under the influence of alcohol, causing oil spillage into a local river. According to Irkutsk governor Igor Kobzev, one tanker carrying 138 metric tons of gasoline sustained significant damage. The governor estimates that as many as 60 to 90 tons of fuel spilled into the Lena River, the world's 11th longest.

By Alex Kimani for Oilprice.com

Russia-Ukraine War Shifts To Black Sea Oil

By Charles Kennedy - Aug 28, 2023

The UK Ministry of Defence has reported that Ukraine and Russia have been fighting over strategic oil and gas platforms in the Black Sea. The platforms are operated by the Chernomorneftegaz, an oil and gas company located along Krymgazseti in Simferopolompany that was seized by pro-Russian authorities in Crimea in 2014.

"The platforms are operated by the Chernomorneftegaz company, which was seized by the pro-Russian occupation authorities in Crimea during the 2014 annexation. Ukraine has struck several Russian-controlled platforms. Both Russia and Ukraine have also periodically occupied them with troops," the report says.

According to the report, the platforms offer "valuable hydrocarbon resources" and can also be used to hold missile systems, land helicopters, or as forward deployment bases.

The Black Sea has become a hotbed of military activity in the war in Ukraine. Ukraine has repeatedly struck several Russian-controlled platforms in the Black Sea, including three gas platforms. Ukraine also frequently uses many of its hi-tech sea drones in the area, and has successfully paralyzed Russia's Black Sea fleet using the drones Ukrainian intelligence chief Kyrylo Budanov has revealed. According to Budanov, the naval drones have proven to be a highly effective "deterrent" despite 60-70% of them being destroyed by Russian forces.

Meanwhile, Kremlin-controlled gas giant Gazprom has maintained gas flows to Europe via Sokhranovka point despite an ongoing transit dispute with Ukraine’s Naftogaz. Ukrainian transit flows have remained stable at slightly above 40 million cubic meters per day according to data from Gazprom, as reported by Energy Intelligence.  Gazprom CEO Alexei Miller had earlier threatened to slap sanctions on Naftogaz as it continues to pursue an arbitration case for non-payment of transit fees by Gazprom.

Gazprom has seen its revenues and profits crash after Europe drastically cut gas purchases from Russia after it invaded Ukraine. The company’s profits for FY 2022 clocked in at 1.226 trillion rubles ($15.4 billion), 41% lower than in 2021 with the company citing a windfall tax imposed by Moscow last year as the reason for the decline. The state controlled company has decided not to pay dividends for the entire year 2022, having previously paid an interim dividend of 1,208 billion rubles ($15 billion) last autumn for the results recorded in the first half of 2022. 

By Charles Kennedy for Oilprice.com

Battery Firm LG Energy Solution Prepares $1-Billion Green Bond

By Tsvetana Paraskova - Aug 29, 2023

South Korean battery manufacturer LG Energy Solution looks to raise as much as $1 billion from the issue of two dollar-denominated green bonds, sources with knowledge of the plans told Reuters on Tuesday.

An official at the company told Reuters that LG Energy Solution had not decided yet on any specific regarding the scale of a green bond issue.

Citigroup, Morgan Stanley, Bank of America, Standard Chartered, and the Korea Development Bank are working on the possible bond issue, according to a term sheet Reuters has seen.

In a previous statement to Reuters, an official at LG Energy Solution said,

“A final decision on specifics including whether to issue corporate bonds is set to be made after closely examining the market situation with the five joint lead managers.”

LG Energy Solution is working with GM to build battery manufacturing capacities in the United States as the U.S. seeks to develop a strong domestic EV battery industry to boost EV adoption.

At the end of last year, the U.S. Department of Energy (DOE), through its Loan Programs Office (LPO), announced the closing of a $2.5-billion loan to Ultium Cells LLC – a joint venture between General Motors and LG Energy Solution – to help fund the construction of new lithium-ion battery cell manufacturing facilities in Ohio, Tennessee, and Michigan.

The three new manufacturing facilities in Ohio, Michigan, and Tennessee are expected to create 6,000 construction jobs and 5,100 operations jobs, DOE said in December 2022.

Separately, South Korea announced earlier this year a $5.32-billion financial support package aimed at helping the country’s battery makers invest in infrastructure in North America over the next five years. The initiative is intended to help South Korean firms capitalize on the Inflation Reduction Act, which requires automakers to source 50% of critical EV battery resources from the U.S. or a U.S. free-trade partner to qualify for new federal incentives.

By Tsvetana Paraskova for Oilprice.com

U.S. Treasury Increases Flexibility For Energy Tax Credit Program

By Julianne Geiger - Aug 29, 2023, 

The U.S. Department of Treasury has outlined new guidelines for wage and apprenticeship requirements for projects that hope to take advantage of clean energy tax credits, the agency said in a release on Tuesday.

The newly proposed IRS rules detail additional for constructing clean energy production and manufacturing facilities and build on rules already laid out by the IRA of last year. Under the new rules, paying the prevailing wage called for by Labor Department rules and utilizing qualified apprentices will allow companies working to build IRA-qualified energy production facilities to earn five times as much in tax credits as the baseline value.

“The Inflation Reduction Act provides increased credit or deduction amounts that generally apply for taxpayers who satisfy certain PWA requirements regarding the construction, installation, alteration or repair of a qualified facility, qualified property, qualified project, qualified equipment or for certain energy facilities. Under the tax law, the increased credit or deduction amount is generally equal to the base amount multiplied by five if the taxpayer satisfies the PWA requirements. There are certain limited exceptions where a taxpayer may be eligible for an increased credit amount without satisfying the PWA requirements,” the IRS statement reads.

The proposed regulations would also provide guidance for taxpayers who initially fail to satisfy the PWA requirements but seek to cure the failure by complying with certain correction and penalty procedures.

According to the IRS, “the prevailing wage requirements of the IRA provide that taxpayers must ensure that all laborers and mechanics employed by the taxpayer (or any contractor or subcontractor) on the construction, alteration, or repair of a qualified facility, project, property, or equipment (hereafter referred to as facility) are paid wages at rates that are not less than the prevailing rates determined by the Department of Labor in accordance with subchapter IV of chapter 31 of title 40 of the U.S. Code (the Davis-Bacon Act) for the type of work performed in the geographic area of the facility.”

By Julianne Geiger for Oilprice.com

Wind Energy Giant Orsted Could Book $2.3 Billion In Impairments

By Irina Slav - Aug 30, 2023

Danish wind energy giant Orsted has warned it could incur impairments of $2.33 billion (16 billion Danish kroner) on its U.S. operations.

The company blamed supplier delays, insufficient subsidies from the federal government, and higher interest rates for the potential impairments.

Speaking of supplier delays, the company said that it “has concluded that there is a continuously increasing risk in these suppliers’ ability to deliver on their commitments and contracted schedules.”

This created the danger of a knock-on effect that would affect future revenues and lead to additional costs, Orsted said. The extent of the impact was estimated at 5 billion Danish crowns or some $730 million.

As for subsidies, the wind turbine maker said that “our continued discussions with senior federal stakeholders about additional ITC qualifications for Ocean Wind 1 and Sunrise Wind are not progressing as we previously expected.

“We continue to engage in discussions with federal stakeholders to qualify for additional tax credits beyond 30%. If these efforts prove unsuccessful, it could lead to impairments of up to DKK 6 billion.”

The amount mentioned is equal to some $870 million.

Higher interest rates, for their part, could result in an impairment of another 5 billion crowns or $730 million.

This is not the first time Orsted is effectively asking governments for more money. The company’s CEO recently did the same indirectly in the UK, saying in an interview with the Financial Times that the company needed more government support if its latest project there was to work out financially.

“If a project which is by far the biggest in the world, with all these opportunities, can only become investable after having worked intensively for a year with everything, it’s hopefully also a stark reminder to the British government that something must change,” Mads Nipper said.

Rising raw material costs and higher interest rates have hit the wind power industry hard, especially offshore. Low tender prices for the electricity future wind farms would generate have also caused disgruntlement in the industry. Because of these troubles, Sweden’s Vattenfall recently canceled a large-scale offshore wind project in the UK.

By Irina Slav for Oilprice.com

Chinese Oil Giant Sinopec Launches Unit To Invest In Overseas Refining

By Tsvetana Paraskova - Aug 31, 2023

Chinese refining giant Sinopec has launched a unit to invest in refining and petrochemicals assets outside China to expand on markets with growing demand and easily available feedstock, company officials have told Reuters.

Sinopec is currently building the team at Sinopec Overseas Investment Holding and allocating budgets for the entity that will invest, build, and operate refineries outside China.

Sinopec looks to “expand overseas refining and chemical business by taking full advantage of the group's core strength,” Zhao Dong, president of parent company China Petrochemical Corp, said earlier this year in an in-house newsletter cited by Reuters.

Sinopec hasn’t revealed which locations it is targeting, but an anonymous senior Sinopec official told Reuters the company would look with priority at locations with easy access to feedstock and expectations of demand growth.

China has limited approvals of domestic refineries amid overcapacity and slowing fuel demand growth, so looking at other locations could be a win for the biggest oil refiner in Asia.

Earlier this week, Sinopec said it was not interested in acquiring Shell’s refinery or petrochemical plant in Singapore but would instead invest in Saudi Aramco’s Jafurah natural gas project alongside TotalEnergies. Saudi Aramco is currently in a "listening phase" on proposals from refining giant Sinopec and Total for a slice of a shale gas development project worth about $10 billion. Saudi Aramco has said it expects the giant gas field to produce about 2 billion cubic feet of gas per day by 2030, at a total cost of $24 billion.

Sinopec, for its part, reported a 20.1% decline in its net profit for the first half of 2023, amid lower international crude oil prices and weaker-than-expected fuel demand recovery in China. In the chemicals division, Sinopec flagged weak domestic demand and reported an operating loss for the January-June period compared to a small profit for the same period of 2022.  

By Tsvetana Paraskova for Oilprice.com

Saudi Aramco Cancels McDermott Contracts Worth $1.8 Billion

By Charles Kennedy 

Saudi Aramco has canceled three contracts with U.S. McDermott for the expansion of the Zuluf field, which will cost several billion dollars.

The contracts themselves were worth some $1.8 billion, Oil and Gas Middle East reports. The news follows a report earlier this month from Energy Intelligence, which cited unnamed sources as saying Aramco was reviewing its deals with McDermott.

The reason for the cancelation, the Saudi state energy giant said, was McDermott’s inability to present bank guarantees that Aramco requires from winning bidders.

It was not only these three contracts that Aramco canceled, however. It has called off the bidding process for other activities in Zuluf expansion, per a report in Upstream.

“The formal cancellation of Zuluf contracts is a setback for international contracting giants including McDermott, which have been eyeing the multiple development projects,” one unnamed source told the news outlet.

After kicking out McDermott, according to sources, Aramco will be looking for other companies that can step in. Italy’s Saipem is one option and Abu Dhabi’s National Petroleum Construction Co. may be another candidate.

Aramco is expanding three fields: Marjan, Berri, and Zuluf. The expansion of the Marjan field is seen adding 300,000 bpd to its production capacity. The expansion of the Berri field should boost its capacity by 250,000 bpd. Zuluf’s expansion is set to add a processing facility with a capacity of 600,000 bpd.

The projects are part of Aramco’s plan to boost its production capacity to 13 million barrels daily. This should happen by 2027, according to energy minister Abdulaziz bin Salman.

"We have no money to waste on anywhere else," bin Salman said last year at an industry conference, noting that with the expansion plans, Saudi Arabia’s oil production could reach 13.2 to 13.4 million barrels daily by 2027.

By Charles Kennedy for Oilprice.com