It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Friday, November 22, 2024
Canary Wharf Owners Offer Cash Injection To Help Refinance Debt
ByEleanor Duncan and Libby Cherry
(Bloomberg, CBBT)
(Bloomberg) -- Canary Wharf Group’s owners are offering to provide £900 million ($1.1 billion) of new equity to help the property company repay debt — on the condition that bondholders agree to a new layer of secured borrowing.
The company, co-owned by the Qatar Investment Authority and Brookfield Corp., is asking holders of its €300 million bonds due 2026 and its £300 million bonds due 2028 for permission to incur new debt secured on certain assets, according to a statement issued today.
The aim of the new financing, which will be backed by some of Canary Wharf’s retail assets, is to refinance the 2026 notes as well as £350 million of bonds maturing in April. Canary Wharf has said it would roll over the 2028 notes “in due course.”
Canary Wharf to Use Retail Assets to Refinance £350 Million Bond
If investors agree to the new debt, Brookfield will commit in a letter to providing equity funding of £900 million to repay Canary Wharf’s high-yield bonds maturing in 2025, 2026 and 2028, as well as any loans outstanding under its revolving credit facility.
QIA, owned by the Qatar sovereign wealth fund, may sign the equity commitment letter at a later stage, said the statement. If that happens, Brookfield and QIA will commit to provide equity funding of £450 million each.
Moody’s Ratings called the plans “materially credit-positive” because of the “significantly reduced refinancing risk and the new shareholder commitment.” Moody’s anticipates the new £610 million debt facility will fully repay the notes due in April 2025 and 2026 when they mature.
However, the credit rating agency also said that the arrangement means the last remaining note, due in April 2028, “faces refinancing execution risk with a weaker unencumbered asset pool.”
Canary Wharf’s bonds due 2026 led gains, as markets priced in the plans to refinance the notes with the new debt. The notes are set for their biggest rise in a year, quoted 2.9 cents on the day higher at 97.2 cents on the euro, according to data compiled by Bloomberg.
The developer of London’s dockland district has come under pressure from falling property prices as tenants including HSBC Holdings Plc and Clifford Chance LLP are moving to new offices in the City. Job cuts in the financial industry and the shift to more flexible working have added to the uncertainty over long-term demand for office space in the east London outpost.
The debt-consent solicitation expires at 4 p.m. London time on December 3. Solicitation agents are Citigroup Inc. and Deutsche Bank AG.
Gunvor’s Rotterdam Oil Refinery Joins List of European Shutdowns
By Jack Wittels and Alex Longley
November 22, 2024
The Gunvor Group refinery at the Port of Rotterdam in Rotterdam, Netherlands.
(Peter Boer/Bloomberg)
(Bloomberg) -- Gunvor Group is temporarily halting its Rotterdam oil refinery because it’s not making enough money, the latest sign that the continent’s plants are struggling to compete with upstarts in other parts of the world.
Effective Nov. 25, the so-called economic halt is due to a lack of prompt availability of commercially viable feedstock, the company said in a statement. Gunvor said it will “continue to monitor the situation and assess future resupply for the refinery in due course.”
With a processing capacity of 75,000 barrels a day, the plant is relatively tiny. Still, it joins a growing list of European refineries with plans to either halt or downsize, including the Wesseling and Gelsenkirchen plants in Germany and the Grangemouth facility in Scotland.
Europe’s refineries are under pressure from large, new plants, including in the Middle East and Africa, such as Nigeria’s giant new Dangote refinery. The rival fuelmakers can send what they make to Europe, and also compete for market share elsewhere in the world.
(Bloomberg) -- Argentina’s economy unexpectedly shrank in September, as President Javier Milei fights to restart an ailing economy amid an aggressive austerity push.
Economic activity fell 0.3% from August, compared with the median estimate for 0.9% growth of economists surveyed by Bloomberg. From a year ago, activity fell 3.3%, according to government data published Friday.
South America’s second-biggest economy is showing incipient signs of recovery, with wage growth outpacing inflation for the sixth consecutive month in September and consumer spending and manufacturing showing gains in recent months. Inflation has been slowing consistently and monthly poverty data Milei’s team tracks closely shows poverty is shrinking from a two-decade peak, too.
Economists surveyed by Argentina’s central bank estimate gross domestic product will contract 3.6% this year, reversed by 3.6% growth in 2025.
Trudeau Reopens Spending Playbook, Shaking Up Bets for Rates, Growth
By Erik Hertzberg,
Bloomberg News
November 22, 2024
(Bloomberg) -- Canadian Prime Minister Justin Trudeau signaled a return to his free-spending playbook as inflation wanes and an election looms, accelerating a bond selloff due to expectations of faster growth and a deeper deficit.
On Thursday, Trudeau announced a C$6.3 billion ($4.5 billion) tax break and rebate package. It includes a two-month halt on federal sales tax on a variety of items including Christmas trees, wine, toys and books, as well as a C$250 check for nearly 19 million Canadians — close to half the population.
The announcement appeared to mark the end of a brief chapter of greater fiscal restraint. For more than a year, Finance Minister Chrystia Freeland has promised to limit budget deficits to avoid fueling inflationary pressures.
Now, inflation is back to the Bank of Canada’s 2% target, and policymakers have already trimmed the benchmark interest rate by 125 basis points since June. Trudeau’s Liberal government sees a green light to dig deeper into the public purse — but some analysts say investors are keeping close tabs on the country’s indebtedness.
“Markets are no longer willing to give governments a free pass when it comes to fiscal stimulus like this. Even though this is relatively small in the big picture, it means more debt, all else equal,” Taylor Schleich, a rates strategist with National Bank of Canada, said by email.
Bonds continued a selloff on Thursday after the announcement, and the 10-year benchmark yield rose 7 basis points on the day to 3.457%. After retail data on Friday showed a consumer spending rebound, it spiked as high as 3.488%.
Freeland said the stimulus package was meant to make Canadians’ lives “a little bit easier, now that we have the space to do so.” Asked whether it would be funded by other taxes, spending cuts or deeper deficits, Trudeau responded that Canada’s debt-to-gross domestic product ratio is the lowest in the Group of Seven and the country’s long-term fiscal picture is sustainable.
But as the government opens the door to more outlays, questions remain about the state of Canada’s finances. Freeland has yet to report final spending and revenue numbers for the last fiscal year, though they are usually released in October. Parliamentary Budget Officer Yves Giroux expects a deficit of C$46.8 billion, blowing past Freeland’s self-imposed target of a C$40 billion shortfall.
“Even before this announcement it looked like one of the guardrails was going to be violated,” Schleich said. “It was already going to be a worse fiscal trajectory than the one laid out in the budget and these announcements certainly don’t help.” Return to ‘Fiscal Activism’
The Trudeau government continued to boost spending even as it pledged smaller deficits. In this year’s budget, it offset new housing and social programs with a new capital gains tax inclusion rate. That prompted a backlash from investors and entrepreneurs, but it helped Freeland project a steady deficit despite major expenditures.
The new announcement suggests Trudeau’s government no longer feels constrained in its ability to deploy fiscal stimulus to regain popularity. Pierre Poilievre’s Conservatives have been about 20 points ahead in most polls for more than a year, hammering the prime minister on affordability and promising to cut taxes, including on income. An election is expected by late October 2025.
The sales tax break is set to run from Dec. 14 to Feb. 15. The left-wing New Democratic Party plans to support it, but said it would continue to campaign to make it permanent and expand it to more items. The government will also face pressure from voters to make it permanent, said Bank of Nova Scotia economist Rebekah Young, which would significantly raise the cost of the policy.
The spending is emblematic of the “fiscal activism that has been a hallmark of the government,” Young said in an interview. The country’s debt has risen to over 40% of GDP, after massive expenditures during the Covid-19 era.
“I think it’s certainly being guided toward more fiscal spending than less fiscal spending over the next couple quarters in Canada at least,” Young said.
After Trudeau’s announcement, traders in overnight swap markets pared bets that the Bank of Canada would deliver a second consecutive 50 basis-point cut in December, putting the odds at less than 25% by the end of Thursday. As of late Friday morning, those odds were below 17%.
The news also prompted some economists to raise their near-term forecasts for Canada’s economy. Analysts at the Bank of Montreal say the country’s gross domestic product will grow at a 2.5% annualized pace in the first three months of 2025, up from 1.7% previously.
“The combination of the new stimulus, more cautious Fed, upside inflation miss, along with an anticipated upward revision to GDP, should all but take a 50 basis-point cut off the table in December,” rates strategist Benjamin Reitzes said.
Speaking to reporters Friday, Trudeau touted his government’s approach to program spending, saying it’s creating optimism and opportunities for families and the middle class.
“We’re focused on Canadians. Let the bankers worry about the economy.”
--With assistance from Jay Zhao-Murray and Monique Mulima.
Talks continue between Canada Post and the union representing striking postal workers with the help of a special mediator.
MONTREAL — Canada Post saw hundreds of millions of dollars drain out of its coffers last quarter, due largely to its dwindling share of the parcels market — while an ongoing strike continues to batter its bottom line.
The Crown corporation said Friday it lost $315 million before tax in the third quarter, larger than its $290 million loss a year earlier.
“An increasingly crowded and highly competitive e-commerce delivery market continued to impact parcels results in the third quarter of 2024,” Canada Post said. The number of packages dropped by six million or nearly 10 per cent year-over-year.
Letter mail volumes also eroded further, though revenue nudged up due to a hike in stamp prices, it said.
The tough financial results put Canada Post on track for “another significant loss” in 2024, which would mark the seventh year in a row in the red.
They also come as Canada Post deals with a weeklong shutdown of its operations after more than 55,000 workers across the country walked off the job on Nov. 15.
The two sides have been wrangling over wages and contract work as well as job security, benefits and working conditions.
Amid the sudden halt of deliveries — government benefit cheques are among the few exceptions — business has increased at other shipping outfits.
“We have record numbers of shippers within the last week. Our volumes — we’re just trying to keep up,” said Kevin Ham, CEO of e-commerce shipping platform Chit Chats.
“Everybody’s at full capacity.”
Purolator, which is majority-owned by Canada Post, said this week its volumes rose by double digits due to the job action. FedEx has implemented a “contingency plan” to manage higher volumes, the company said earlier this week.
Profit margins for shippers may be widening too, at least temporarily.
Montreal-based pantyhose maker Sheertex said that alternative carriers, overloaded with orders, have implemented “significant surge pricing” on shipments.
Small businesses especially have felt the squeeze of the strike, as store owners and entrepreneurs frantically search for workarounds to get orders to customers quickly and affordably.
“It’s a hard time of year for both sellers — like e-commerce sellers — as well as consumers. The consumers are ordering, and if it was in the Canada Post network, their shipments are stuck,” said Ham, who said Chit Chats handles deliveries for some 12,000 online shippers each month ranging from boutique sock makers to jewelry designers.
Even big corporations face hurdles.
“Customers shipping to PO boxes and more rural areas may see delays,” said Walmart Canada spokeswoman Stephanie Fusco in an email. However, she said most consumers making online purchases directly from the company — rather than from third-party sellers on its site — would see “minimal impact.”
The last postal work stoppage took place starting in late October 2018, when employees carried out rotating strikes lasting 31 days.
That strike as well as one in 2011 ended when the federal government passed legislation sending employees back to work.
Canada Post has reported more than $3 billion in losses since 2018, as Canadians sent fewer letters while competitors gobbled up even more of the parcel market.
Households received seven letters a week on average in 2006, but only two per week last year, according to Canada Post’s latest annual report, which dubbed the trend “the Great Mail Decline.”
Both the union and the Crown corporation have pushed expanded parcel deliveries as a way to boost revenue, but they differ on how to go about it. The union says full-time employees should deliver package shipments on weekends at overtime wage rates, while Canada Post hopes to hire contract workers.
According to last year’s annual report, the postal service’s share of the parcel market eroded from 62 per cent before the COVID-19 pandemic to 29 per cent last year, as Amazon and other competitors seized on skyrocketing demand for next-day doorstep deliveries.
This report by The Canadian Press was first published Nov. 22, 2024.
— With files from Tara Deschamps in Toronto
Christopher Reynolds, The Canadian Press
CRIMINAL CAPITALI$M; PRICE FIXING
Maple Leaf Foods launches defamation lawsuit against Canada Bread and Grupo Bimbo
TORONTO — Maple Leaf Foods Inc. has launched a defamation lawsuit against Canada Bread Co. Ltd. and its parent company Grupo Bimbo.
The lawsuit comes after Canada Bread accused Maple Leaf of using it as a “shield” to avoid liability in an alleged bread price-fixing scheme, which is subject of two class-action lawsuits and an ongoing Competition Bureau investigation.
In its lawsuit, Maple Leaf says allegations that the company was aware of or played a role in the alleged conspiracy are unfounded, defamatory and devoid of merit.
Maple Leaf was Canada Bread’s controlling shareholder until it was purchased by Grupo Bimbo in 2014.
A spokesperson for Canada Bread said Maple Leaf’s claims are without merit.
Canada Bread is so far the only company to have been fined by the Competition Bureau in relation to the alleged bread price-fixing conspiracy. It pleaded guilty to four counts of price-fixing in 2023 and took a $50-million fine.
However, it has previously denied participating in a “lengthy, wide-ranging conspiracy” to fix the price of bread, and has said that any anticompetitive behaviour it participated in was at the direction and to the benefit of Maple Leaf.
Maple Leaf in its lawsuit says there is no merit to the allegations the bureau has made against Canada Bread concerning an alleged conspiracy.
The Competition Bureau began investigating the alleged scheme in 2016, and has alleged that at least $1.50 was added to the price of a loaf of bread over 16 years.
Loblaw and Weston Foods, both subsidiaries of George Weston at the time, received immunity from prosecution after admitting to participating in an “industry-wide price-fixing arrangement.”
The major grocers, along with Canada Bread and other companies, are also the subject of two class-action lawsuits concerning the alleged conspiracy, though Loblaw and George Weston recently settled in both suits for a combined $500 million.
The other grocers and food companies implicated in the ongoing lawsuits have denied participating in the alleged conspiracy.
The plaintiffs for the Ontario-based class action lawsuit recently applied to have Maple Leaf added to the class action as a defendant because of its past ownership of Canada Bread, but were not successful.
Canada Bread has alleged Maple Leaf is liable for any damages it has sustained or will sustain from the Competition Bureau investigation and the class action lawsuits, which Maple Leaf has refuted.
Maple Leaf’s lawsuit accuses Canada Bread and its owner Grupo Bimbo of engaging in a “collusive and unlawful scheme” to shift blame onto Maple Leaf for what it claims is mismanagement of the company after it was acquired.
It also claims Grupo Bimbo and Canada Bread didn’t conduct a proper investigation into the bureau’s allegations before Canada Bread took steps to seek leniency in the face of the investigation, despite warnings from Maple Leaf to be careful and not make “unfounded admissions of wrongdoing.”
Maple Leaf alleges the two companies have conspired to shift liability onto it, “even though any such liability is the direct result of their own poor and ill-advised choices.”
Grupo Bimbo did not immediately respond to a request for comment.
This report by The Canadian Press was first published Nov. 22, 2024.
Companies in this story: (TSX:MFI)
Rosa Saba, The Canadian Press
Wabigoon Lake Ojibway Nation says yes to next phase of repository process
Friday, 22 November 2024
Members of Wabigoon Lake Ojibway Nation in northwestern Ontario have expressed their support for moving forward to the next phase of the site selection process to host a deep geological repository for Canada's nuclear fuel.
(Image: NWMO)
Wabigoon Lake Ojibway Nation (WLON) is the second of the two communities in Nuclear Waste Management Organization's (NWMO) site selection process to indicate a willingness to move forward: the Township of Ignace confirmed its willingness in June.
It said it had been involved for more than a decade in discussions and information-sharing through a Learn More Agreement with the NWMO, which has enabled the community's members and leadership to thoroughly examine what potentially hosting a repository could mean to the community.
"Our Nation has spoken and the outcome was YES," Chief Clayton Wetelainen said. "We have been involved in this process for over 12 years and our members have decided to continue on this path. As Anishinaabe we have a sacred relationship with the land. We belong to the land, and we have a sacred duty to protect the land for all our relations and for generations yet to come."
The community's decision reflects the Nation’s commitment to "thoroughly explore the project’s feasibility through a rigorous regulatory process that upholds WLON’s Anishinaabe laws and values." The vote does not signify approval of the project, but demonstrates the Nation’s willingness to enter the next phase of in-depth environmental and technical assessments, to determine safety and site suitability.
"It may take a decade for NWMO to finalise their plan, complete the necessary studies and assessments, and obtain permits. This is just the beginning of a long process, and our Nation will be leading every step of the way. WLON is committed to prioritising safety and environmental protection throughout this process," WLON’s Chief and Council said.
“We sincerely thank the members of Wabigoon Lake Ojibway Nation, Chief Wetelainen and Council for their thoughtful approach and commitment to learning and engagement over the past 12 years,” said NWMO Vice President of Site Selection Lise Morton.
The Mayor and Council of the Township of Ignace, which declared its willingness to host the repository earlier this year, expressed their "respect and appreciation" for WLON's decision, saying: "The proposed DGR (deep geological repository), designed to safely store Canada’s used nuclear fuel, presents a unique opportunity for both the Township of Ignace and Wabigoon Lake Ojibway Nation to exercise self-determination while addressing the pressing environmental stewardship and economic challenges of today for both our community and the land we all live on."
The NWMO launched the process to select a suitable site with informed and willing host communities for the deep geological repository in 2010. The list of 22 communities that proactively expressed interest has been gradually narrowed down through social engagement and technical site evaluations and now two areas - both in Ontario - remain as potential hosts: the Wabigoon Lake Ojibway Nation-Ignace area and the Saugeen Ojibway Nation-South Bruce area.
The Municipality of South Bruce recently confirmed its willingness to move forward to the next phase of the site selection process following a referendum held in October.
Brazil's Angra 1 approved for 20-year life extension
Friday, 22 November 2024
Eletronuclear's Angra 1 nuclear power unit has been authorised by Brazil's National Nuclear Energy Commission to operate to 2044 - extending its life to 60 years.
Angra 1 and 2 (Image: Eletronuclear)
Angra 1 reached criticality in 1982 and entered commercial operation in 1985. The Westinghouse pressurised water reactor has a design capacity of 640 MWe. Eletrobras Eletronuclear also operates Angra 2, a 1275 MWe PWR which began commercial operation in 2001.
The request for the life extension was submitted in 2019. Since then there has been a "meticulous technical evaluation" of the request, a series of studies, four missions undertaken by International Atomic Energy Agency experts and an Integrated Implementation Plan for Safety Improvements.
As part of this plan there will be upgrades to control systems, physical protection structures and radioactive waste management protocols, the National Nuclear Energy Commission (CNEN) said. They will be implemented during maintenance and refuelling shutdowns.
CNEN’s Director of Radiation Protection and Safety Alessandro Facure said: "Each aspect of this process was analysed with technical rigour and responsibility. Our mission is to ensure that the Angra 1 operation remains safe for workers, the environment and society."
Eletronuclear said it will be investing BRL3.2 billion (USD550 million) between 2023 and 2027 and noted that similar plants in the USA had been going on to receive approval for further extensions to 80 years.
In May the company said that it also uses the US Nuclear Regulatory Commission's License Renewal Application process and said that measures already taken to extend the service life include new steam generators, changing the reactor pressure vessel cover and replacing the main transformers, as well as implementing ageing/obsolescence management systems. It said it would get short-term financing from its main shareholders, ENBPar and Eletrobras, while negotiations were completed with the US Export-Import Bank for the full modernisation programme.
President of Eletronuclear Raul Lycurgo said: "The renewal of Angra 1 should be celebrated and praised as it is the culmination of the great work carried out by our technical team. Everyone has dedicated themselves to the maximum over the last five years and have proven that Angra 1 continues to be completely safe and able to deliver steady, clean energy for the development of Brazil."
Angra 1 generated 4.78 million MWh in 2023 and has had a load factor of 88.24% for the past five years. It delivers enough energy to supply a city of two million people.
CNEN said that an important part of the authorisation process had been the Local Emergency Plan and the Fukushima Response Plan, implemented after 2011 - "CNEN teams will continue to monitor the implementation of these measures, including technical improvements and emergency response protocols, which are fundamental to the safety and protection of the plant and surrounding areas".
The decision was a "milestone" not just in terms of energy production but also in showing the maturity of the regulatory system in Brazil. It said Eletronuclear will also be required to carry out a Periodic Safety Reassessment in 2033 "where compliance with the highest international safety standards will be verified".
Strategic partnership plans to develop advanced nuclear energy in South Africa
Friday, 22 November 2024
Specialist global investment firm C5 Capital and multinational mining and metals processing group Sibanye-Stillwater are joining together to participate in future development of advanced nuclear energy opportunities in South Africa and globally.
Gold mining operations at Cooke (Image: Sibanye-Stillwater)
Their newly announced strategic partnership will explore opportunities worldwide related to the identification, acquisition, financing, development, and management of uranium projects and production facilities which have the potential to supply uranium to small modular reactors (SMRs) and the fuel cycle for SMRs globally, the companies said.
C5 Capital invests into advanced nuclear energy, space, and cybersecurity, and has an Energy Security Fund that invests to strengthen the resilience of the global nuclear value chain. The company is a signatory of the Net Zero Nuclear Industry Pledge, a global initiative to triple nuclear energy capacity by 2050.
South Africa has a history of uranium production - generally as a by-product of gold or copper mining. Sibanye-Stillwater's diverse portfolio includes interests in mine tailings retreatment operations, including nearly sixty million pounds of mineral resources at its Cooke and Beatrix gold operations.
At Cooke, the company has 32.2 million pounds U3O8 (12,386 tU) of measured and indicated uranium resources contained in two surface tailings facilities, a byproduct of gold mining operations. These surface resources "represent a key strategic opportunity due to the proximity of the existing Cooke (gold only) and Ezulwini (gold and uranium) processing plants," the company says. According to World Nuclear Association information, the Ezulwini-Cooke operations last produced uranium in 2016.
The Beisa section of the Beatrix underground gold mine contains 26.9 million pounds U3O8 (measured and indicated).
Andre Pienaar, founder of C5 Capital, said the combination of C5's innovative investments in advanced nuclear with Sibanye's uranium production potential "creates a transformative partnership in clean energy both for South Africa and globally".
Finland and UK to work together under new nuclear energy pact
Friday, 22 November 2024
Finland and the UK will intensify their cooperation in a broad range of peaceful uses of nuclear energy under a newly signed agreement that recognises the potential for new and emerging nuclear technologies, including for non-power applications.
(Image: Government of Finland)
The objective of the memorandum of understanding (MoU) signed by Finland's Minister of Climate and the Environment Kai Mykkänen and UK Minister for Energy Security and Net Zero Lord Hunt of Kings Heath is to establish a bilateral framework for UK-Finnish collaboration concerning nuclear energy projects, programmes, research and development, and policies. The two parties intend to "establish a platform by which to facilitate bilateral opportunities for mutual collaboration in civil nuclear energy".
Areas for collaboration include new nuclear deployment, stressing the importance of a technology-inclusive approach encompassing traditional large-scale reactors as well as small modular reactors to provide secure baseload energy, and noting the potential of advanced modular reactors in meeting future energy demands. The MoU also notes "the potential of advanced nuclear technologies for electricity production as well as heat and hydrogen production as well as other non-power applications", plus the fusion-related research activities of both participants. Recognising the importance of regulatory exchange in enabling the efficient deployment of SMRs and other advanced nuclear technologies, the participants "intend to encourage further regulatory collaboration across jurisdictions as required, as well as supporting global regulatory alignment".
The MoU also highlights cooperation in diversification of fuel supply - noting that Finland is planning uranium recovery and the UK has "significant capabilities across the entire civil nuclear fuel cycle, with ambitions to develop advanced nuclear fuel capabilities in HALEU" - regulatory exchange, financing, nuclear waste management and final disposal of spent fuels, nuclear safety, and skills and talent development. The UK’s export credit agency, UK Export Finance, has "up to" GBP4 billion (USD5 billion) available for Finland-based projects that buy UK goods and services, and "has signalled its interest in considering support for the deployment of UK SMRs in Finland", the MoU notes. Finland’s export credit agency, Finnvera, can similarly finance certain UK-based projects that buy Finnish goods and services.
"Nuclear energy is the cornerstone of Finland’s clean energy system. The Finnish Government welcomes the new projects. We need reliable partners like the United Kingdom for developing and deploying technologies such as small and advanced modular reactors. We are also developing new nuclear energy technologies, including reactors intended for heat production, and diversifying the fuel supply for our power plants,” Mykkänen said.
Hunt said the UK was committed to working closely with its allies to develop civil nuclear programmes and boost shared energy security with low-carbon electricity. "Through collaborating with Finland and our other international partners, we can accelerate the development of cutting edge nuclear technology - helping us hit our global climate ambitions and deliver net zero," he said.
Hermes 2 construction permits approved by US Nuclear Regulatory Commission
Thursday, 21 November 2024
The US Nuclear Regulatory Commission has voted to issue construction permits to Kairos Power for the Hermes 2 Demonstration Plant.
A rendering of the Hermes 2 plant (Image: Kairos)
The permits will authorise Kairos to build a facility with two 35 MWt molten salt-cooled reactors that would also include a shared power generation system.
Kairos' Hermes Low-Power Demonstration Reactor became the first US Gen IV reactor to receive a Nuclear Regulatory Commission (NRC) construction permit in December 2023, and now Hermes 2 becomes the first electricity-producing Gen IV plant to be approved for construction in the USA, Kairos said.
Hermes 2 is intended to provide operational data to support the development of a larger version for commercial electricity production. Kairos submitted its application to build Hermes 2 in July 2023, and the NRC issued its final safety evaluation for the permits in July this year, and the final environmental assessment for site in August.
"While keeping safety at the forefront, the permitting process was quite efficient, and we issued these permits in less than 18 months," said NRC Chair Christopher Hanson "This shows we can rapidly apply relevant conclusions from earlier reviews to promptly reach decisions on new reactors."
Following a new, streamlined mandatory hearing process conducted via written documents, the NRC said it has authorised the Office of Nuclear Reactor Regulation to issue the permits, having found the review by NRC staff of the Hermes 2 application "adequate to make the necessary regulatory safety and environmental findings". The permits are expected to be issued in the near future.
"The Commission's approval of the Hermes 2 construction permits marks an important step toward delivering clean electricity from advanced reactors to support decarbonisation," Kairos CEO and co-founder Mike Laufer said. "We are proud to lead the industry in advanced reactor licensing and look forward to continued collaboration with the NRC as we chart a path forward with future applications."
Hermes 2 plant will be built on land adjacent to the Hermes reactor, which is currently under construction. Kairos Power must apply for and obtain an operating licence from the NRC before the plant can start up.
Feasibility study for Belarus new nuclear to be prepared in 2025
Friday, 22 November 2024
Deputy Energy Minister Denis Moroz has said that a report will be drawn up next year on the options of a second nuclear power plant or a third unit at the existing plant in Belarus.
The existing Belarus nuclear power plant currently has two units (Image: Belarus energy Ministry)
According to the country's Ministry of Energy's Telegram account, Moroz said that a systemic analysis and a final decision was needed: "We are currently working quite intensively, studying the prospects, and seeing trends of rapid growth in electricity consumption."
The official Belta news agency reported him as adding that "if we, together with scientists, come to the understanding that these trends are sustainable, then, of course, the feasibility study will show us how effective either the construction of a new nuclear power plant unit on the existing site or the creation of another station on a new site can be." He added that, in line with a request to the ministry from the president, a feasibility study would be prepared in 2025 "and we expect that the final decision will be made during this period".
The existing Belarus nuclear power plant is located in Ostrovets in the Grodno region. A general contract for the construction was signed in 2011, with first concrete for unit 1 in November 2013. Rosatom began construction of unit 2 in May 2014. They are both VVER-1200 reactors. The first Ostrovets power unit was connected to the grid in November 2020 and, the energy ministry says, the plant will produce about 18.5 TWh of electricity per year, equivalent to 4.5 billion cubic metres of natural gas, with an annual effect on the country's economy of about USD550 million. The second unit was put into commercial operation on 1 November 2023.
The country has been considering the option of a second nuclear power plant because of projections that electricity demand will rise in the coming years. Deputy Prime Minister Victor Karankevich, who was energy minister until earlier this year, said that if a second nuclear power plant was built, Belarus would become a world leader in terms of the share of its energy which comes from nuclear.
Cryptocurrency
Moroz was speaking during a tour of the nuclear power plant to mark a year since it was fully commissioned. He said the plant will generate more than 40% of the country's electricity needs and reduce CO2 emissions by about 7 million tonnes per year.
According to Belta he said that the capacity offered by the new plant allowed incentive schemes to be introduced: "The power supply system works in such a way that it is impossible to determine where the electricity for cryptocurrency mining comes from - from a nuclear power plant or from gas generation. However, the emergence of BelNPP created conditions under which we formed incentive tariffs to attract mining to Belarus. If a company is engaged in cryptocurrency mining or processing a large array of data, it can receive electricity at incentive tariffs. Moreover, these tariffs are differentiated by the volume of electricity consumption. The more electricity such a company consumes, the cheaper the electricity is for it."
There are also steps being taken to switch homes to electric heating and also transport electrification. "We see how much the lifestyle and comfort level of people who use electricity have changed. Therefore, of course, the construction of the Belarusian NPP has had a positive impact on the energy sector and related industries," Moroz said.
Centrus to restart centrifuge manufacturing, expand capacity
Thursday, 21 November 2024
Centrus Energy Corp is to resume centrifuge manufacturing activities and expand capacity at its facility in Tennessee as well as investing an additional USD60 million over the next 18 months for the effort to support a potential large-scale expansion of uranium enrichment at its American Centrifuge Plant in Piketon, Ohio.
Centrus's centrifuges (Image: Centrus)
Such a large-scale expansion would require a multi-billion dollar public and private investment, the company said. It has recently secured more than USD2 billion in contingent purchase commitments from customers to support future production of low-enriched uranium (LEU), as well as two awards from the US Department of Energy (DOE) to support the enrichment and deconversion of high-assay, low-enriched uranium (HALEU) - uranium enriched to contain between 5% and 20% uranium-235 that will be used by many advanced reactors.
Centrus President and CEO Amir Vexler said this latest investment "will jump-start what we hope will be a multi-billion dollar public and private commitment to re-establishing America's uranium enrichment capacity at scale while reducing our dependence on foreign nations".
"The all-American solution we are offering represents the best path forward to ensure a reliable fuel supply for today's reactors, support the deployment of next generation reactors, and meet America's enduring national security needs for enriched uranium. Most importantly, it puts us in position to execute an expansion quickly," he said.
"We have always said that restoring US enrichment capacity at scale requires a public-private partnership, including a robust federal investment alongside customer offtake commitments and private capital. This additional investment by Centrus reflects our continued willingness to step up to the plate in such a partnership."
Centrus's American Centrifuge technology is exclusively manufactured at its Technology and Manufacturing Center in Oak Ridge, supported by a domestic supply chain of 14 major suppliers and dozens of smaller suppliers.
For some years the USA has relied on imported material rather than domestic uranium enrichment capacity: currently, the only operating commercial uranium enrichment capacity in the USA is the Urenco USA (UUSA) plant at Eunice in New Mexico, which uses a European centrifuge design that is exclusively manufactured in the Netherlands and is currently being expanded. French company Orano is also looking to build a new centrifuge uranium enrichment facility, for which it has selected a preferred site in Oak Ridge.
But the US administration has been taking steps to lessen US reliance on overseas suppliers, particularly Russia, on which the USA had been relying for a sizeable portion of its enriched uranium requirements: 27% of the uranium enrichment services purchased by US nuclear plant operators came from Russia, more than any other foreign supplier.
A prohibition on Russian LEU imports has been in place since August. Centrus had obtained a waiver allowing it to import low-enriched uranium from Russia for delivery to US customers in 2024 and 2025, but the Russian government has now placed its own ban on exports of LEU to the USA. Russian government-owned company Tenex - Centrus's largest supplier of LEU for delivery to its US and international customers - has said it will seek the necessary export licences to meet its obligations, but Centrus said in a filing to the US Securities and Exchange Commission that its ability to meet its own delivery obligations will be affected if Tenex cannot obtain the licences.
Centrus is competing for more than USD3.4 billion of DOE funding to jumpstart domestic nuclear fuel production. As well as the recent award of USD2 million for domestic HALEU production, the company, via its American Centrifuge Operating subsidiary, is one of several selected under a separate solicitation aimed at HALEU deconversion. A third solicitation, aimed at US production of LEU for existing reactors, has not yet been awarded.
The Nebras Petrochemical Plant, initially led by Shell, has the potential to significantly boost Iraq's economy.
Development challenges include corruption, governance issues, and political instability, which have hindered progress.
The U.S. has outlined stringent conditions for collaboration, including project cohesion, legal and financial accountability, and security measures.
Among the many projects in Iraq’s energy sector that could each make it much-needed billions of dollars a year in profits, the Nebras Petrochemical Plant is around the top of the list in terms of its potential. British supermajor Shell signed the original memorandum of understanding to develop the idea back in 2012 and then signed the official deal to do so in January 2015, with high hopes on both sides for the project. For Shell, it would offer the opportunity to build out its then-upstream operations in Majnoon and West Qurna 1 into a flagship value-added downstream capability. These massive fields offered huge additional oil and associated gas feedstock to add to that which could come from Shell’s 44 percent stake in the US$17 billion 25-year Basrah Gas Company project. Shell’s design plans for Nebras were for a project that could produce at least 1.8 million metric tonnes per year (mtpa) of various petrochemicals. This would make it Iraq's first major petrochemicals project since the early 1990s and one of only four major petrochemicals complexes across the entire country at that point. Following years of wrangling with the various Iraqi governments since 2012, Shell finally withdrew from the Nebras project in February this year. News emerged last week that U.S. powerhouse engineering and energy consultancy KBR has now begun a comprehensive technical and economic review to map an optimal implementation path for the project, building on previous studies.
To save our friends at KBR some time, OilPrice.com has summarised all the key points (they are always the same) from all the previous major studies of the Nebras project as follows (using specific elements from a major Russian oil and gas firm’s petrochemical division’s all-encompassing study a few years ago to illustrate each). The first point is that Iraq has vast oil and gas resources, which can be used to feed a petrochemical plant. Specifically, it holds an estimated 145 billion barrels of proven crude oil reserves - around 9 percent of world’s total – although this is a very conservative estimate, as analysed in full in my latest book on the new global oil market order. Its proven natural gas reserves total around 131 trillion cubic feet - the 12th largest in the world - but again there may be a lot more. The rate of exploration for non-associated (with oil drilling) gas reserves has not matched that for oil, and the associated gas resources it might have may also be massive but remain largely untapped. The second point is that there is every benefit to Iraq using these energy flows in the production of high-value petrochemicals rather than low-value oil and gas exports or -- as happens now for a huge proportion of its associated (with oil) gas flows – rather than being flared (essentially, burning money). At the time of the Russian analysis, Iraq was flaring 12.4-16.4 billion cubic metres a year (Bcm/y) of associated gas at a then-oil production rate of around 4.1 million barrels per day (bpd). In 2023, it burned off 17.7 Bcm.
The third key part of the studies focus on the technical needs for optimising flows of feedstock for a fully-functioning Nebras Petrochemical Plant. This would require increasing (as it was at the time of the big Russian study) gas volumes up to an average of one billion standard cubic feet per day (Bscf/d) so that ethane can be extracted on a sustainable and reliable basis and that would give sufficient volume for a major petrochemicals plant to be viable. Even by 2019/2020, Shell’s gas project with the Basrah Gas Company had reached a peak production rate of over this required level (1.035 Bscf/d to be exact). The Russian oil and gas giant’s petrochemical division highlighted that ethane – not naphtha, as Iraq’s Oil Ministry has often suggested – be used, as it was in the development of Saudi Arabia’s master gas system that captured associated gas, which was then fractionated and supplied as primary feedstock to the flagship Jubail Industrial City. This is also advantageous in Iraq, as the highest concentration of ethane (up to 10 percent and slightly over) is usually found in associated gas streams (which Iraq has a lot of), and processing ethane produces the highly-bankable ethylene with few by-products (mainly fuel gas) to process and manage. Additionally, this reduces the capital required for construction and minimises the complexity of the logistics and distribution requirements. Later, as the industry and corresponding infrastructure grows, heavier feed streams can be utilised, as happened with the use of propane, butane and naphtha in Jubail. Overall, according to the previous major feasibility reports on the Nebras Petrochemical Plant, a world-class petrochemicals sector in Iraq would require around US$40-50 billion to develop but would yield exponentially more than that in pure profits over the years.
In the grand scale of the world’s oil and gas sector, this is a snip at the price, so why has it not already happened? “Iraq is among the worst countries on corruption and governance indicators, with corruption risks exacerbated by lack of experience in the public administration, weak capacity to absorb the influx of aid money, sectarian issues and lack of political will for anti-corruption efforts,” according to previous entries in the ‘Corruption Perceptions Index’ by the independent non-governmental organisation, Transparency International. It added: “Massive embezzlement, procurement scams, money laundering, oil smuggling and widespread bureaucratic bribery that have led the country to the bottom of international corruption rankings, fuelled political violence and hampered effective state-building and service delivery.” It concluded: “Political interference in anti-corruption bodies and politicization of corruption issues, weak civil society, insecurity, lack of resources and incomplete legal provisions severely limit the government’s capacity to efficiently curb soaring corruption.”
Consequently, when the latest Iraqi government paid its regular yearly visit to Washington recently to ask for money in exchange for the same promises it never has any intention of keeping, Washington made it very clear that the U.S. would only consider working with Iraq in the field of oil and gas provided that certain conditions were met. The first part of this risk-reward matrix involves ‘cohesion’, which aims to ensure that Iraq guarantees that each key element in a project will be completed in full, regardless of whether there is a change of government during the lifetime of a project. The second part is ‘security’, relating to the safety of U.S. personnel on the ground and to the legal and accounting soundness of the business and legal practices involved in any agreement. And the third factor is ‘streamlining’, which involves the decision-making and work-implementation processes in any project functioning seamlessly throughout its lifetime. According to a senior figure working closely with the U.S.’s sanctions complex for Iraqi and Iranian issues exclusively spoken to by OilPrice.com, any major agreements signed by big U.S. oil and gas firms in Iraq will have to be agreed in full by U.S. lawyers, all accounts will have to be checked by U.S. accounting firms, working processes will have to be checked by U.S. project consultancy firms, and security issues of any nature will have to be worked through and then monitored on an ongoing basis with U.S. security organisations. Whether KBR reaches all the same conclusions remains to be seen, of course.
By Simon Watkins for Oilprice.com
END
Offshore Deepwater Drilling To Dominate Oil in 2020s
Rystad: offshore oil and gas investment to reach $104 billion in 2024.
The Financial Times reported this week that in 2025, offshore oil will account for more non-OPEC oil supply than U.S. shale oil.
Guyana, Namibia, Suriname and the Gulf of Mexico see strong offshore oil and gas growth.
About a month ago, news emerged that Seadrill and Transocean, the offshore drilling heavyweights, were discussing a merger aimed at capitalizing on a rebound in investments in the business. Soon after, Portugal’s Galp launched its second drilling campaign offshore Namibia after a huge discovery, and Suriname is about to become the second Guyana. Offshore is back—and it’s back to stay.
Earlier this month, Wood Mackenzie reported that offshore drilling was going to increase significantly in the coming years, with production from the deepwater sector alone facing a surge of 60% by 2030. Fellow forecaster Rystad Energy in 2023 saw investments in offshore oil and gas drilling at $100 billion annually for 2023 and 2024. This year, it is expecting 2024 investments to reach $104 billion. That’s just the start of a boom.
Deepwater drilling has been a strategic focus for big oil companies for several years now, as fields in shallower waters mature and production declines, while demand for oil appears to keep going higher. Shale has been one diversification venue, but there isn’t space for everyone in the Permian—and there has been so much oil discovered in some parts of the world ocean.
Guyana comes to mind, of course, with the string of discoveries that Exxon, Hess, and CNOOC made off the coast of the tiny South American country. Its neighbor Suriname was a no-brainer in terms of more exploration, and it seems the results are encouraging: TotalEnergies announced a $10.5-billion commitment for drilling in the country’s water.
There is also Namibia, which appears to be the next hotspot for oil and gas in Africa. Big Oil majors are reporting discoveries potentially containing billions of barrels of crude, along with trillions of cubic feet of natural gas. And they are drilling more. Because shale oil won’t last forever.
The Financial Times reported this week that in 2025, offshore oil will account for more non-OPEC oil supply than U.S. shale oil. By 2030, offshore oil, and more specifically deepwater oil, will be “the key, if not the only, source of non-Opec oil growth,” according to Rystad Energy senior partner Espen Erlingsen, who added that “This comeback looks set to make the 2020s deepwater’s decade.”
Naturally, it is possible that U.S. shale could serve more surprises in the coming years. There are reports that Tier 1 production is running out, with the oil coming out of the ground increasingly light and sweet, but production growth has surprised before when predictions had it peaking. Even so, the investment trends in offshore oil suggest shale’s peak is on the horizon. The 2024 sum is a 50% increase on 2020. Even accounting for the fact that 2020 was a devastating year for oil investments as a whole, the increase is substantial in the context of the transition push.
The fact this investment may very well rise even further in the years to 2030 signals a rather optimistic frame of mind among energy companies even as they double down on their emission reduction pledges—because they have the technological know-how to make offshore drilling both cheaper, safer, and, apparently, lower-emission. Because this is where the oil of tomorrow will come from, per the industry.
“Vito represents the future of Shell in the Gulf of Mexico,” Shell’s general manager for U.S. growth assets, Ireti OMotoso, told the FT recently. “She is faster, leaner, creates less emissions, and is technologically more advanced than earlier platforms. She does a lot more for less.”
This seems to be the general message of Big Oil when it comes to offshore drilling. Because it is normally a lot more expensive than shale drilling, the industry has made an effort over the past decade or so to make every dollar count—and it seems to have succeeded. Sure, offshore drilling will remain a lot more expensive than shale drilling but those offshore wells will keep producing for decades, unlike shale wells.
This has, of course, raised the hackles of environmentalists who claim the world does not need any more oil and gas. Some have called for a moratorium on offshore drilling. “Big Oil’s attitude shows a lack of imagination beyond oil and gas,” Mark van Baal, head of activist group Follow This, told the FT. “At a time when the world must rapidly transition away from hydrocarbons, these companies are betting on decades-long fossil fuel projects and pouring huge amounts of capital into a market that will start declining before the end of the decade.”
The thing is that this market may well keep growing after the end of the decade. Guyana’s Stabroek Block alone is seen generating profits of $170 billion between 2024 and 2040, the FT notes in its report, citing Wood Mac—and that’s just the profits for the partners developing the field. Guyana will make another $190 billion in income from its oil in the same period. With profits like this, you don’t really need an imagination beyond oil and gas.
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