Sunday, May 12, 2024

 

Enbridge Tops Q1 Earnings Estimates Amid Strong Oil Demand

Strong oil demand and production in North America helped Canadian pipeline giant Enbridge Inc (NYSE: ENB) raise its first-quarter adjusted earnings and beat analyst estimates.

Enbridge, operator of Mainline, North America’s biggest oil pipeline network,   reported on Friday adjusted earnings of US$1.46 billion (C$2.0 billion) for the first quarter. Per share earnings rose by 8% year-over-year to C$0.92 per common share, which beat the C$0.81 average analyst estimate compiled by LSEG.    

Adjusted core earnings – or EBITDA – rose in the first quarter compared to the same period of 2023, due to higher throughput on Flanagan South Pipeline due to market demand from the U.S. Gulf Coast, higher volumes on Express-Platte, and contributions from recently acquired assets.

The higher market demand for crude supply in North America was partially offset by significantly warmer weather which impacted the Gas Distribution and Storage division, and by a realized foreign exchange loss on hedge settlements compared to a gain for the same period in 2023.

“In Liquids, we saw high utilization across our systems including another quarter of strong Mainline performance,” Enbridge president and chief executive officer Greg Ebel said in a statement.

“Strong operational performance and execution drove record financial results,” the executive added, noting that the pipeline operator is on track to achieve its full-year EBITDA and distributable cash flow (DCF) per share guidance.

Last week, another Canada-based pipeline operator, TC Energy Corporation, reported an increase in comparable earnings for the first quarter of 2024 versus the same period last year, beating analyst estimates, as natural gas pipeline deliveries from western Canada to domestic and export markets jumped to a record.

TC Energy’s total deliveries on its natural gas NGTL System averaged 15.3 Bcf/d in the first quarter, up by 0.7 Bcf/d compared to the first quarter of 2023. The NGTL System achieved a new daily delivery record of 17.3 Bcf during the period January to March 2024. 

    U.S. Unveils Ambitious Plans to Boost Domestic Lithium Production


The U.S. has big plans for lithium production in the coming years as it ramps up output to support the rollout of utility-scale battery storage and greater electric vehicle (EV) uptake. To ensure the U.S. has enough lithium to support the rapid growth of the battery market and reduce reliance on China, President Biden is supporting the development of the country’s lithium industry with funding from the Inflation Reduction Act (IRA) and other national policies. Meanwhile, the private sector is investing heavily in lithium as the consumer uptake of EVs continues to grow year on year. 

In March, the U.S. Department of Energy (DOE) announced plans to lend Lithium Americas up to $2.26 billion, under the Advanced Technology Vehicles Manufacturing loan programme, for the construction of its Thacker Pass lithium project in Nevada. Development began in March 2023 and the mine is expected to commence operations later in the decade. supplying General Motors with lithium supplies. This marks one of the biggest government investments in the lithium industry to date. The government views the development of the domestic critical minerals industry as key to achieving a green transition, providing the materials needed for large-scale renewable energy projects and the rollout of EVs. 

Initial production is expected to stand at around 40,000 metric tonnes of battery-quality lithium carbonate per year, equivalent to the amount needed to power around 800,000 EVs, to eventually increase capacity to 80,000 tonnes per year. In addition to public funding, the project is also being supported by GM, which has invested $650 million in the development. Jon Evans, the Lithium Americas CEO, stated “We have an incredible opportunity to lead the next chapter of global electrification.” 

Lithium Americas is planning to extract lithium from a clay deposit at its Thacker Pass, an extraction method that has not previously been carried out on a commercial scale. Extracting lithium from the clay requires the company to import sulphur to create sulphuric acid. Lithium Americas will, therefore, construct, a rail terminal around 97 km from the mine to bring materials to site.

In November last year, Exxon Mobil announced it had plans to commence lithium production starting in 2027. It will extract lithium from briny water in subsurface wells in Arkansas. The company plans to use conventional oil and gas drilling methods to access the reservoirs, which sit at around 10,000 feet underground. It will then use direct lithium extraction (DLE) technology to separate lithium from the saltwater. Exxon will partner with Tetra Technologies to develop its lithium business and it will sell supplies under the brand name Mobil Lithium. 

Exxon aims to supply lithium for over a million EVs annually, to become one of the biggest U.S. lithium suppliers by the end of the decade. This could cost the company up to $2 billion in investment to provide 50,000 tonnes of lithium. Dan Ammann, the president of Exxon's Low Carbon business unit, believes “In the long term, lithium really is a global opportunity.” He explained, “We are starting here because there is an urgent need to ramp up domestic production of these critical materials.”

Despite positive steps towards the development of a U.S. lithium industry, it is not all clear sailing as several projects are expected to take years to develop, while, at the same time, environmentalists and indigenous groups across the country are critical about plans for new mining activities. Albemarle, a major lithium producer, announced aims to reopen the resource-rich lithium Kings Mountain mine in North Carolina by late 2026, to help boost the domestic supply of the critical mineral. However, it is facing delays due to the fall in lithium prices, by around 40 percent over the last year. Eric Norris, the president of energy storage at Albemarle, stated “It’s going to be a later date.” He explained, “It slowed down a bit given the concerns we have, but we are still progressing it forward. It’s not that we’ve stopped it.”

The company hopes to produce enough lithium to support the manufacturing of up to 1.2 million EVs a year. Albemarle plans to go ahead with the permitting process, which could take up to two years, with construction expected to follow. However, the company believes Lithium prices must be at a minimum of $20 per kilo to justify new investments. The average price in 2023 stood at $15 per kilo. Nonetheless, the demand for lithium is expected to increase as the demand for utility-scale battery storage increases and the uptake of EVs continues to grow.

In addition to weak lithium prices over the last year, many mining developments have been delayed due to opposition from environmentalists and indigenous groups who oppose new mining projects. While mining for lithium is key to a green transition, the proper regulations and oversight must be in place to ensure that mining companies do not cause unnecessary damage to the environment as we transition away from fossil fuels to ‘less harmful’ alternative energy sources. 

By Felicity Bradstock for Oilprice.com 

 

South Africa May Limit Shell's Drilling Licenses After Its Downstream Exit

South Africa has hinted that Shell could receive fewer oil exploration licenses after the supermajor decided to sell its downstream business in the country, Mineral Resources and Energy Minister Gwede Mantashe told Bloomberg in an interview published on Friday.

Earlier this week, Shell said it is preparing to divest from downstream operations in South Africa as a result of an internal portfolio review.

Shell holds a majority share in Shell Downstream SA (SDSA), which was formed by the merger agreement between Shell South Africa and Thebe Investment Corporation a decade ago. The partnership was intended to merge Shell’s marketing and refining business, with Thebe, a black empowerment group, holding a 28% stake in the downstream business, as reported by Reuters.

According to the Daily Maverick, Shell and Thebe Investments are still in heated debate over the value of Thebe's stake in the project.

“Shell has decided to reshape the Downstream portfolio and intends to divest our shareholding in Shell Downstream South Africa (SDSA),” the oil giant said in a statement in response to Daily Maverick’s queries, adding that the decision followed a full review of “… the Downstream and Renewables businesses across all regions and markets in line with Shell’s focus on performance, discipline, and simplification”.

Following this announcement, South Africa’s Energy Minister Gwede Mantashe told Bloomberg “They still want to stay upstream, so what we should be doing, we should be more reluctant to grant licenses and permits, at that level, to Shell.”

Shell has relinquished some licenses offshore South Africa amid regulatory uncertainty as the country hasn’t finalized yet a draft Upstream Petroleum Resources Development Bill.

Analysts believe that some offshore formations that South Africa shares with the offshore areas of Namibia – the latest deepwater exploration hotspot – could hold great resource potential.

Shell and TotalEnergies have already made large discoveries offshore Namibia, kicking off the Namibian oil rush in 2022.  

By Charles Kennedy for Oilprice.com

 

U.S. Extends License For Transactions With Venezuela's PDVSA

The United States has extended a general license through November 15, allowing certain transactions with Venezuelan state oil company PDVSA that are necessary for wind-down operations, according to a notice from the U.S. Treasury Department. The extension covers key players in the industry, including Halliburton, Schlumberger, Baker Hughes Holdings, and Weatherford International PLC.

This extension comes amid ongoing political tensions and economic challenges in Venezuela. Recent contract cancellations by entities like Polish refiner Orlen underscore the impact of geopolitical uncertainty on global energy markets, highlighting the complexities faced by industry stakeholders.

Despite the sanctions, Venezuela remains open to dialogue with key global players, particularly China, its largest creditor, and the United States. Venezuela's Nicolas Maduro expressed earlier this week the country's commitment to repay its debt to China.

The Biden Administration's decision to extend the general license reflects the nuanced approach of the U.S. in managing its relationship with Venezuela's oil sector, seeking balance between diplomatic considerations and commercial interests by providing temporary relief for companies engaged in wind-down operations.

Last month, crude oil prices were pressured by news that the U.S. would reimpose oil sanctions on Venezuela after a six-month pause, beginning on May 31. The upward pressure on oil prices, however, was tempered by a build in U.S. crude oil inventories. That license allowing wind-down transactions is now being extended until November.

Last November, Venezuelan Oil Ministry officials said that its crude oil production had reached 850,000 bpd and was on its way to recovering market share. While the figure was an improvement from the 786,000 bpd in October, and despite oil ministry officials' claim that recovery in its troubled crude oil industry was ongoing, the six-month pause in sanctions left but a temporary window open for traders to rush into Venezuelan crude that will soon close.

By Julianne Geiger for Oilprice.com

Xi's Euro Trip Showcases Beijing's Expanding Influence



By RFE/RL staff - May 11, 2024



  • Xi received warm welcomes and inked strategic partnerships in France, Serbia, and Hungary, emphasizing China's expanding influence in Central and Eastern Europe.

  • Despite tensions over issues like trade and Ukraine, Xi effectively navigated diplomatic challenges and strengthened ties with key European leaders.

  • China's assertive diplomacy aims to position the country as a dominant player on the world stage, with investments and agreements reflecting its ambition to shape global dynamics.

While Xi’s trip dealt with everything from trade ties with the European Union to China’s relationship with Russia amid the war in Ukraine, the tour can be boiled down to one overarching message from China: Xi leads a rising global superpower that can’t be contained and its influence in Europe is here to stay.

The Chinese leader received opulent red-carpet welcomes in Paris from French President Emmanuel Macron and from China-friendly leaders like Serbia’s Aleksandar Vucic in Belgrade and Hungary’s Viktor Orban in Budapest.

In France, Macron looked to hammer home some tougher European positions on Ukraine and trade subsidies -- particularly over the ongoing EU probe into Chinese electric vehicles on the European market -- while still looking to charm Xi on other issues.

Ahead of the visit, Macron had argued in public statements for Europe to establish “a more balanced” trade relationship with China, and that issue was tackled on May 6 during three-way talks with Xi and EU Commission President Ursula von der Leyen.

As Theresa Fallon, director of the Center for Russia Europe Asia Studies, told me ahead of the visit, this would allow for Macron to “play good cop” and von der Leyen “to play bad cop” in dealing with Xi.

However, Xi looked effective at deflecting concerns and driving a wedge between Macron and von der Leyen by either flatly denying any problems, misrepresenting China’s position, or offering concessions that were only rhetorical.

In Belgrade and Budapest, meanwhile, Xi looked triumphant and received highly choreographed welcomes that reinforced Chinese messaging about deep divisions within Europe over how to engage with China.

Xi left both countries after announcing new strategic partnerships and investments that will further cement China’s relevance in Central and Eastern Europe.

Why It Matters: Public opinion on China across much of Europe has soured dramatically in recent years, particularly in Central and Eastern Europe.

When Xi last visited Europe in 2016, he was warmly embraced in Prague by then-Czech President Milos Zeman amid a wave of high-profile investments and visits to the Czech Republic, Serbia, and Poland.

Poland has since slowed its engagement with Beijing, and the Czech Republic, under new leadership, has become one of Europe’s more hawkish governments on China. Only Serbia has continued to deepen its ties out of that 2016 grouping.

While that marked a notable step back in the region, along with the irrelevance of the 14+1 Chinese format for engaging with Central and Eastern Europe, this recent visit shows that China can’t be blocked and that Beijing has plenty of new cards to play in its broader relations with Europe.

Reflecting this Chinese view, Renmin University Professor Wang Wen wrote in a recent column that the strategic scales look set to tilt in China’s favor because “Europe is eager for economic recovery more than ever.”

“Europe is having a rethink: After losing Russia, it can't afford to lose China, too,” Wang wrote.

Three More Stories From Xi's Visit

  1. France: Wining And Dining Can Only Go So Far

Macron, who has sought to develop Europe as a strategically autonomous military and economic power, tackled a host of issues with Xi, but was hoping that this independent line could shine through when discussing the war in Ukraine.

What It Means: During joint statements to the press, Xi announced that he backed Macron’s call for an “Olympics truce,” which the French president saw as an opportunity to “work toward a sustainable resolution [of conflicts] in the full respect of international law.”

The comments and behind the scenes talks reportedly left some in Macron’s circle cautiously upbeat that Xi could be receptive to curtailing some of China’s backing for Russia amid the war in Ukraine.

But Xi also conceded very little, at least publicly.

He reiterated that China will not deliver weapons to Russia and would “strictly control” exports of dual-use equipment, both of which are positions that his government has already vowed to enforce.

Xi also made no acknowledgement of Western concerns that China is helping to keep the Russian economy running by giving it access to goods sanctioned by the West, and he then accused Washington and other Western countries of hypocrisy by fueling the conflict through weapons deliveries to Ukraine.

“We oppose using the Ukraine crisis to cast blame, smear a third country, and incite a new Cold War,” Xi said on May 6.

While some French officials may have walked away with some glimmers of hope, that assessment is not widely shared. As I reported ahead of Xi’s visit, EU officials said that China was looking to bargain its participation this summer in a peace conference on Ukraine as a way to pave “the way for Moscow's participation in similar meetings in the future,” one official told RFE/RL.

Xi’s true stance is also borne out in Russia and on the battlefield in Ukraine. A U.S. intelligence assessment said that, in 2023, about 90 percent of Russia’s microelectronics came from China, which Russia has used to make missiles, tanks, and aircraft. The same research said that nearly 70 percent of Russia’s approximately $900 million in machine tool imports in the last quarter of 2023 came from China.

  1. Serbia: Reverence, Shared Grievance, And A Dose of Caution

Greeted by cheering crowds, Xi and Vucic praised their countries’ “ironclad friendship” with one another, as they signed 28 new cooperation agreements and announced a new deal that would “deepen and elevate the comprehensive strategic partnership between China and Serbia.”

The Details: The visit to Serbia touched on both substance and symbolism.

Serbia under Vucic has remained solidly pro-Chinese and still looks to China for billions of dollars in investment, something that Vuk Vuksanovic, a senior researcher at the Belgrade Center for Security Policy, told RFE/RL’s Balkan Service has turned Beijing into Serbia’s “most important partner in the East at the moment,” even surpassing Moscow now that “Russian-Serbian ties are under constant scrutiny because of Ukraine.”

The elevated strategic partnership reflects that trend, as does a new free-trade agreement signed before the visit that Vucic said would allow Serbia to export 95 percent of its goods duty-free to China.

Belgrade and Beijing also signed 28 documents that would continue to deepen their ties. While most of the agreements were vague and did not have dollar figures attached, they covered a range of issues, from ministerial exchanges to state media agreements, that chart a course for a larger Chinese role in the Balkan country.

When it came to the symbolism of the visit, Xi arrived on the 25th anniversary of NATO’s accidental 1999 bombing of the Chinese Embassy in Belgrade. In an article published on May 7 by Politika, a Serbian newspaper, Xi said that “NATO flagrantly bombed the Chinese Embassy,” which “will stay in the shared memory of the Chinese and Serbian peoples.”

But Xi also decided to skip the former embassy site during his visit, which is now a large Chinese cultural center that also includes a memorial for the bombing.

While the Chinese Foreign Ministry used the occasion to criticize NATO, the move shows a cautious approach from Xi when it comes to exciting anti-Western bombast at home and abroad, where it could have overshadowed other aspects of his visit.

  1. Hungary: A Risky Gamble That's Paying Off

Xi finished his Europe trip with a stop in another friendly nation, touching down on May 8 in Budapest, where he inked new investments and elevated Hungary’s relationship with China to new heights.

What You Need To Know: Xi’s visit marks a capstone for Orban’s embrace of China that positions Hungary as a bridgehead for Chinese influence in Central and Eastern Europe.

In an article in Magyar Nemzet, which is controlled by Orban’s governing Fidesz party, Xi called for Hungary to “lead” the region’s relations with Beijing and said that China wanted to work closely with Budapest on Belt and Road Initiative (BRI) projects. The Chinese leader also promised to “speed up” construction of a high-speed train line between Budapest and Belgrade that has been delayed for years.

During the visit, Xi and Orban also pledged to elevate their ties to an “all-weather comprehensive strategic partnership” -- a Chinese classification that denotes the highest possible type of relationship that Beijing can have with another country. Only Belarus, Pakistan, and Uzbekistan are labeled as “all-weather” partners.

The move is sure to further strain Hungary’s already fraught relationship with Brussels, as will the 18 joint projects with China that were announced by Hungarian Foreign Minister Peter Szijjarto.

While the announcement of the deals lacked details, they would include a high-speed rail project to Budapest’s international airport from the city and a new rail line across the country to transport electric cars, batteries, and other products from Chinese factories planned to be built in eastern Hungary. Budapest and Beijing also vowed to cooperate on nuclear energy projects.

The focus on electric vehicles is noteworthy as Hungary is looking to Chinese investment to establish itself as Europe’s premier manufacturing hub for electric vehicles, batteries, and other new technologies.

China’s electric vehicle giant BYD announced in December that it would build an assembly plant in Hungary, its first production facility in Europe. Great Wall Motor, another major Chinese electric vehicle maker, is also looking into building an even bigger factory in Hungary.

More From Xi’s Europe Trip

Taiwan and Kosovo: During his shared remarks with Xi, Vucic used the occasion to tie Serbia’s territorial claims with Kosovo to Beijing’s own claims over Taiwan.

“Just as we have clear positions on the issue of Chinese integrity -- that Taiwan is China -- so they support the territory of Serbia without any reservation,” Vucic said. Xi later said that China “supports Serbia’s efforts to preserve its territorial integrity regarding Kosovo.”

The Next Issue: Ahead of Xi’s visit and amid a slew of Chinese espionage and trade scandals in Europe, my colleagues and I looked at the spread of Chinese-made surveillance cameras from Dahua and Hikvision, two partially Chinese state-owned companies, across Central and Eastern Europe.

An RFE/RL survey of nine countries in the region shows that governments have purchased millions of cameras over the last five years, despite the devices’ security vulnerabilities and the manufacturers’ lax data practices.

No Presser: After their talks on May 9, Xi and Orban held what was billed as a news conference, but was instead just both leaders reading statements without taking any questions.

Xi famously avoids any unscripted media encounters. MTVA, a state-owned and financed Hungarian channel, had the exclusive broadcast rights to Xi’s visit, and my colleagues in RFE/RL’s Hungarian Service were not granted accreditation from the Hungarian prime minister’s office to attend.

Prime Time: As Xi arrived at Belgrade's airport on May 7, Serbia’s state-owned television station even interrupted a broadcast of the Eurovision Song Contest to make way for coverage of the welcoming ceremony for the Chinese leader.

One Thing To Watch

Now that Xi’s big Europe trip is a wrap, attention will turn to Russian President Vladimir Putin’s upcoming visit to China. The dates for the Russian leader’s trip have not yet been confirmed, but Bloomberg quoted Kremlin sources saying that it would take place May 15-16.

By RFE/RL