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UK Quits Treaty Allowing Oil Firms to Sue Governments Over Climate Policy

By Charles Kennedy - Feb 22, 2024

The UK will leave the Energy Charter Treaty (ECT), a 1994 pact that allows oil and gas companies to sue governments over their climate policies for compensation for lost profits.

The Energy Charter Treaty was originally designed to promote international investment in the energy sector and has historically provided protections for investors in fossil fuels.

Efforts to modernize the treaty, which the UK considers “outdated” in view of its net-zero policies and ambitions, have failed, resulting in a stalemate, which prompted the UK government to announce on Thursday that it would leave the Energy Charter Treaty (ECT) “after the failure of efforts to align it with net zero.”

After considering the views of businesses, industry, and civil society, ministers will now instigate the UK’s withdrawal, which will take effect after one year, removing protections for new investments after this period. ?

The UK is not the only European country quitting the treaty—France, Spain, the Netherlands, and six other EU member states have announced similar moves.

According to the UK, proposals to modernize the treaty to support cleaner technologies have been subject to months of talks between European countries, resulting in a stalemate. The UK government believes that the decision to leave the treaty “will support the UK’s transition to net zero and strengthen its energy security.”

“The Energy Charter Treaty is outdated and in urgent need of reform but talks have stalled and sensible renewal looks increasingly unlikely,” the UK’s Minister of State for Energy Security and Net Zero, Graham Stuart, said in a statement.

“Remaining a member would not support our transition to cleaner, cheaper energy, and could even penalise us for our world-leading efforts to deliver net zero.”

Environmentalists welcomed the UK's withdrawal from the ECT.

“Leaving this incredibly flawed treaty is a brilliant win for our environment and the climate,” Kierra Box of Friends of the Earth, said, as quoted by the BBC.

 

Iraq Reopens Refinery after a Decade-Long Shutdown

By Charles Kennedy - Feb 23, 2024

Iraq reopened on Friday its rehabilitated North Oil Refinery in Baiji, which had been inactive for more than 10 years and which brings OPEC’s second-largest crude producer closer to being self-sufficient in oil products, the Prime Minister Media Office said in a statement.

The Baiji refinery was damaged by insurgent violence when Al Qaeda and later ISIS were fighting for control of Iraqi territories and for control of the oil refinery.  

The refinery was shut down in 2014 when Islamic State fighters seized it and stole crude and petroleum products from the territories they controlled in Iraq to fund their insurgency.  

The repaired refinery was inaugurated today by Iraqi Prime Minister Mohammed Al-Sudani, who praised the staff of the North Refineries Company who undertook the challenge of reconstructing the facility after it was liberated from ISIS.

The reopened oil refinery has a processing capacity of around 150,000 barrels per day (bpd). The restart of the refinery raises the total processing capacity of the Baiji refining complex to 290,000 bpd, according to Reuters.

With the start-up of the North Oil Refinery in Baiji, Iraq is nearing the capacity necessary to supply all of Iraq’s oil product demand by the middle of next year, at the latest, PM Al-Sudani said at the inauguration ceremony.

“This will save us billions of dollars that will be allocated to other service and economic sectors by ceasing the import of oil derivatives, thus achieving our reform goals,” the Prime minister's media office said.

Despite producing more than 4 million bpd, Iraq continues to import oil products—a policy that has been in place for decades. With the reopening of the North Oil Refinery in Baiji, “we are on track to meet the country's total oil derivatives needs by mid-next year, potentially even surpassing this goal ahead of schedule,” Iraq says.

 

US Native American Tribes Given Power To Halt Hydropower Projects  

By Charles Kennedy - Feb 23, 2024

The Federal Energy Regulatory Commission (FERC) has granted Native American tribes more power to block hydropower projects on their lands if they oppose the plans.  

FERC has previously applied the general policy of granting permits to planned hydropower projects even where Tribes have raised issues over the impact of such projects, which require enormous amounts of water in areas such as the Southwest, where water is scarce.

However, FERC denied last week preliminary permit applications for seven pumped storage hydroelectric projects proposed on Navajo Nation land, and said it has recently revised the “general policy of granting permits.” 

The federal regulator’s trust responsibility to Tribes should be similar to when permits have been opposed by federal land managers or similarly affected federal agencies, the commission said.

Therefore, FERC is “establishing a new policy that the Commission will not issue preliminary permits for projects proposing to use Tribal lands if the Tribe on whose lands the project is to be located opposes the permit.”

FERC advises potential applicants to work closely with Tribal stakeholders prior to filing applications to ensure that Tribes are fully informed about proposed projects on their lands and to determine whether they are willing to consider the project development.  

“It is encouraging to see federal decision makers honoring the trust responsibilities to Native American Tribes,” Nicole Horseherder, executive director of the Navajo nonprofit Tó Nizhóní Ání, said in a statement.

Earlier this month, the Hopi Tribe called on the regulator to change its rules for granting preliminary permits for hydroelectric projects on tribal lands.

“Our Hopi community is simply asking the Federal Energy Regulatory Commission to allow us to be at the table when outside companies want to build projects on our land base, along our waterways, or ancestral spaces that we have been connected to well before the arrival of colonizers,” said Craig Andrews, Vice Chairman of the Hopi Tribe.

By Charles Kennedy for Oilprice.com

BLUE HYDROGEN

German Natural Gas Giant to Invest Heavily in Hydrogen Infrastructure

By Tsvetana Paraskova - Feb 21, 2024,

Germany’s state-controlled firm Securing Energy for Europe (Sefe) plans to invest around $540 million (500 million euros) in repurposing some of its underground gas storage sites and gas pipelines into infrastructure fit for storing and transporting green hydrogen, Sefe’s CEO Egbert Laege told Reuters in an interview published on Wednesday.  

“The exact investment calculation is not yet available, but we are talking about sums in the mid-three-digit million-euro range for converting some of our gas storage sites to hydrogen,” Laege told Reuters.

SEFE, wholly owned by the German government, was created in 2022 after Germany saved a former Gazprom unit it had expropriated in April 2022 with a multi-billion-euro loan. Gazprom Germania was renamed Securing Energy for Europe GmbH (Sefe), to secure energy supply to Germany and Europe, the German government said at the time.

Currently, SEFE operates 5.6 billion cubic meters of gas storage caverns in Germany, or around a quarter of the country’s total gas storage capacity, according to Reuters estimates. The company is supplying natural gas to industry and gas distributors in Germany, the UK, and other European markets.

SEFE has created a new hydrogen department as it looks to further expand its activities in renewable energies “with the aim of decarbonizing its business model,” the company said at the end of last year.

In December, Sefe and Equinor signed one of the biggest-ever natural supply deals for Norway’s energy giant worth an estimated $54 billion (50 billion euros). The agreement also included a non-binding letter of intent with the intention that Sefe will become a long-term off-taker of giga-scale, low-carbon hydrogen supplies from Equinor starting in 2029 and continuing towards 2060.

“SEFE and Equinor share ambitious goals to accelerate the development of the hydrogen economy. This includes joint business opportunities related to transport and storage of hydrogen for the future,” Laege said at the time.  

By Tsvetana Paraskova for Oilprice.com

 

Canadian Oil and Gas Companies Relinquish All Pacific Coast Permits

By Tsvetana Paraskova - Feb 21, 2024

Canada is celebrating a milestone as oil and gas companies have now voluntarily relinquished the last remaining permits for oil and gas exploration and development off its Pacific Coast.

Canada has a federal moratorium on all offshore oil and gas activities on its West Coast in place since 1972, following a provincial moratorium by British Columbia on oil and gas drilling from 1959.

However, permits issued before 1972 were still valid.

Now that Chevron relinquished the last remaining oil and gas development permits offshore Western Canada, the country marks a milestone in protecting its environmentally-sensitive Pacific Coast and waters, Canada’s federal Energy and Natural Resources Minister Jonathan Wilkinson said on Wednesday.

Earlier this month, Chevron Canada said it had decided to voluntarily relinquish its 23 offshore oil and gas permits on Canada’s west coast.

“Chevron regularly evaluates its portfolio and has no plans to pursue development of these offshore permits, which are an estimated 5,900 square kilometres,” the Canadian unit of the U.S. supermajor said in early February.

Chevron remains “committed to safely and responsibly developing Canada’s onshore and offshore oil and gas resources,” the company added.

“With these final permits, Natural Resources Canada has officially secured the surrender of all 227 permits in the Pacific offshore,” Wilkinson said in a statement today carried by Reuters.

Last year, the other U.S. supermajor, ExxonMobil, gave up nine offshore oil and gas exploration permits it had held in British Columbia for more than 50 years. 

Several of Chevron and Exxon’s permits were in now-protected marine areas, according to the Canadian government

Meanwhile, Canada’s oil producers in Alberta plan higher output for this year and expect to earn more from their heavy crude once the long-delayed expanded Trans Mountain Pipeline enters into service. Despite the uncertainty around the start date of the Trans Mountain Pipeline Expansion (TMX), some of the biggest Canadian producers plan to boost production in Alberta’s oil sands in the short to medium term.

By Tsvetana Paraskova for Oilprice.com

 

Sri Lanka Pays Partial Oil Debt to Iran with $20M in Ceylon Tea

By Charles Kennedy - Feb 21, 2024

Sri Lanka has repaid $20 million in oil debt to Iran with tea in a move that Sri Lanka officials say do not violate U.S. sanctions on Iran, Agence France Presse reports. 

In April 2022, Sri Lanka defaulted on $46 billion in foreign debt, earning a $2.9-billion bailout from the International Monetary Fund (IMF), and leaving it bereft of cash to pay its oil debt to Iran. 

Sri Lanka owes a total of $251 million in oil debt to Iran, of which $20 million has now been paid in the form of tea. 

“So far US$20 million worth of tea has been exported to Iran under the barter trade agreement,” AFP cited  Sri Lankan Prime Minister Dinesh Gunawardena’s office as saying in a statement after talks.

The Sri Lanka-Iran oil-for-tea swap deal was signed in late 2021, but swaps were postponed due to continuing economic crisis in Sri Lanka and the resignation of its president in July the following year. Last year, Reuters cited Sri Lanka’s Tea Board Chairman, Niraj de  Mel as saying that the deal was originally that Sri Lanka would send Iran $5 million in tea every month for 48 months. 

Ceylon Tea is the highest-earning crop in Sri Lanka in terms of foreign currency deals. In 2022, according to Reuters, citing government data, Sri Lanka brought in $1.25 billion in foreign currency tea deals. The tea is typically shipped to Iran via the UAE. 

According to Reuters, the tea-for-oil swap deal is organized as such that the Ceylon Petroleum Corp, which is state-owned, which purchased the Iranian oil, gives Indian rupees to the Tea Board to ship tea, while Iranian tea importers pay riyals to the National Iranian Oil Company. 

By Charles Kennedy for Oilprice.com

 

Armed Group Shuts Down Libya’s Zawiya Refinery

By Charles Kennedy - Feb 21, 2024

An armed group has taken control of and shut down Libya’s Al-Zawiya refinery and two oil complexes, demanding unpaid salaries and other benefits, Libya media report. 

The armed group, the Petroleum Facilities Guard (PFG), said in a Tuesday video statement that the refinery operators have five days to comply with their requests or face more closures from other PFG members at key facilities around Libya. 

The Mellitah and Misrata oil complexes have also been shut down by the PFG. This latest shutdown comes only a month after the reopening of Sharara, the largest oilfield in Libya, which was shut down by protesters earlier this year. 

The protest come amid an ongoing test of the legitimacy of the interim prime minister of the UN-recognized Government of National Unity (GNU), Abdulhamid Dbeibah. 

The protesters said in the video statement that they “do not belong to any political faction, and refuse to transfer the PFG members to other security services unless they are given their full legal rights”.

"Despite all the officials' promises which all failed, perhaps the latest of which was the instructions of the Prime Minister of the Government of National Unity, Abdul Hamid Dbeibah, to consider the situation of the PFG and its members, grant them their rights, implement the decisions regarding their financial dues, and restore their full rights, there was no adherence to any of those instructions," the statement said, as reported by the Libya Update. 

The Mellitah oil complex is the only hub for exporting Libyan gas to Italy via the Greenstream pipeline. 

According to the Libyan National Oil Company (NOC), as of last year, the total capacity of all refineries in Libya is around 380,000 barrels per day. The Zawiya refinery can handle 120,000 bpd. 

On January 3, protesters shut down Libya’s Sharara oilfield, forcing the NOC to declare force majeure on the 300,000-bpd field. The force majeure was lifted on January 23. Protests also closed the field down for two days in July last year following the arrest of an official who attempted to become the head of Libya’s central bank. 

By Charles Kennedy for Oilprice.com