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The Federal Trade Commission (FTC) announced a consent agreement requiring divestitures as a condition of Buckeye Partners, L.P.’s (Buckeye’s) $435 million acquisition of 26 petroleum terminals from Magellan Midstream Partners, L.P. (Magellan). Petroleum terminals are a component of the supply chain for gasoline, diesel, and jet fuel. The FTC alleges the acquisition would increase prices for terminaling services and make collusive conduct between the markets’ remaining competitors more likely.

The consent agreement requires Buckeye to divest five terminals no later than 10 days after the companies consummate the deal. Notably, the consent agreement requires that Buckeye seek prior approval from the FTC for 10 years before acquiring any light petroleum products terminal within a 60-mile radius of the divested assets. The Commission unanimously approved issuing the complaint and consent agreement.

Buckeye is a major terminaling service provider for light petroleum products, which include gasoline and other fuels, in South Carolina and Alabama. Magellan similarly operates terminals in the central and southeastern United States. According to the FTC, petroleum terminals are critical to the efficient distribution of light petroleum products because they serve as intermediaries between the pipelines and water vessels that ship the products, such as gasoline, and customers at the pump.

The FTC alleges that absent divestitures of terminals in North Augusta, South Carolina; Spartanburg, South Carolina; and Montgomery, Alabama, the acquisition would significantly increase concentration and reduce competition. The FTC alleges that without the consent agreement:

• In North Augusta, the acquisition would have reduced the number of competitors in the area from three to two.
• In Spartanburg, the acquisition would result in Buckeye controlling half of the gasoline terminal capacity and the majority of light petroleum product storage capacity in the city. Buckeye and Magellan are the two largest competitors among seven firms.
• In Montgomery, the number of firms terminaling light petroleum products would drop from six to five and the number of gasoline terminaling services would drop to four.

Key Takeaways

The FTC’s unanimous decision to bring an enforcement action against this transaction offers two key insights.

First, companies considering mergers or acquisitions should expect heightened scrutiny from the FTC and the Department of Justice, especially if they operate in industries under intense political scrutiny due to high inflation and rising prices. In July 2021, President Biden issued an executive order calling on the FTC to utilize its broad mandate to combat increasing costs and perceived consolidation. A few months later, President Biden sent a letter to FTC Chair Lina Khan directing her attention to oil and gas companies specifically.

The Biden administration has not hesitated in drawing attention to industries it believes warrant more scrutiny from the FTC, and the FTC has been listening. This is the FTC’s second case in three months in the oil and gas sector. On March 25, 2022, the FTC issued a consent order requiring divestitures in a transaction involving two waxy crude oil companies. Gas prices are a highly visible reflection of inflation and rising prices generally, and the industry can expect continued scrutiny from the FTC.

Second, the prior approval provision in the consent decree is noteworthy. The FTC revitalized these provisions in 2021, but the Commission does not unanimously approve of their use. FTC Commissioners Phillips and Wilson issued a statement following the consent agreement in this transaction questioning whether prior approval would benefit competition and consumers.

In particular, they noted that a company bound by such a provision must obtain FTC approval for certain future transactions, but the FTC is not obligated to approve or reject the transaction within a specified period of time, possibly leaving the companies in a uncertain holding pattern. Commissioners Phillips and Wilson’s statement also expressed concerns that these provisions may actually have the opposite of their intended effect and increase prices.

Companies considering transactions should be aware that the FTC is increasingly looking to include these provisions in consent agreements.

By WILSON SONSINI, June 24, 2022

Expect higher food prices but little relief at the pump with Biden’s latest questionable move to combat inflation… Last Friday, Biden’s EPA Mandated the Most Ethanol Use Ever.

The EPA, after gathering comments since releasing it proposed blending requirements in December, said Friday it will require refiners to blend 20.77 billion gallons of ethanol, biodiesel, and other renewable fuel this year.

Additionally, the oil industry must blend 250 million more gallons of renewable fuel, both this year and next, after a federal court found the Obama administration inappropriately reduced the 2016 blending requirements.

The agency also denied roughly 70 exemptions for small refineries, many of which had been granted under former President Donald Trump.

Corn Growers Cheer

“The Biden EPA is to be commended for restoring sanity to the refinery exemption program,” Monte Shaw, the Iowa Renewable Fuel Association’s executive director, said in a statement. “These exemptions have never been justified and were simply being used to illegally undermine the RFS. We are grateful this long nightmare is over.”

Refiners Complain

But Chet Thompson, CEO of the American Fuel & Petrochemical Manufacturers, said the blending requirement for this year is “contrary to the administration’s claims to be doing everything in their power to provide relief to consumers.”

“Unachievable mandates will needlessly raise fuel production costs and further threaten the viability of U.S. small refineries, both at the expense of consumers,” Thompson said.

EPA Raises Ethanol Mandate for 2022

Also on Friday, the Wall Street Journal reported EPA Trims Ethanol Fuel Mandate for 2020-21 But Raises It for 2022

The Biden administration on Friday retroactively reduced the amount of ethanol that must be blended into gasoline for 2020 and 2021 but raised the level for 2022, saying the changes are aimed at helping boost domestic fuel supplies.

The agency can adjust these requirements retroactively, signaling to refiners how much they will have to spend to buy market credits that help them comply with obligations lingering from past years.

Biden’s Ethanol Gas Price Trick

Flashback April 12, 2022: Please consider Biden’s Ethanol Gas Price Trick

In Iowa on Tuesday, Mr. Biden announced an environmental waiver to allow sales of 15% ethanol gasoline blends (E15) this summer. The Clean Air Act prohibits this because higher ethanol blends can increase smog in hot weather. They can also erode older car engines, gas pumps, storage tanks and pipelines.

In 2019 Mr. Trump directed the EPA to let E15 be sold year-round to help Midwest farmers. EPA then rewrote the Clean Air Act, claiming the text was “ambiguous.” The D.C. Circuit of Appeals disagreed and ruled that EPA had exceeded its statutory authority.

Mr. Biden says E15 can save drivers on average 10 cents a gallon, but the waiver will have a negligible impact on gas prices nationwide since so few stations sell it.

It’s also unclear what legal authority EPA intends to invoke. Under the law EPA can only issue emergency waivers to address temporary fuel-supply shortages in discrete regions or states. 

Meantime, Congress’s ethanol mandate is causing many small refiners to shut down and the U.S. to import more foreign fuel. Last week EPA denied 36 hardship exemptions for small refineries, so even more could close.

Synopsis 

•  30% higher corn prices with other crops rising by 20%, according to the National Academy of Sciences.
• Growing more corn for ethanol causes increased amounts of water pollutants from U.S. farms
• Expect more fertilizer use when fertilizer costs are soaring
• More summer smogE15 erodes older car engines, gas pumps, storage tanks and pipelines.
• Small refiners will suffer and some will go out of business allowing Elizabeth Warren to moan about the concentration of “Big Oil”. 

To top things off, when Trump tried the same thing, the courts struck it down as illegal. 

OilPrice.com by ZeroHedge, June 17, 2022

Italian Ambassador to Saudi Arabia Roberto Cantone said his country was making great efforts to diversify its gas supplies to achieve independence from Russia, by expanding its cooperation with other gas-exporting partners.

He stressed in this regard that his country was looking forward to establishing a long-term partnership with a future source of hydrogen such as the Kingdom.

In remarks to Asharq Al-Awsat, Cantone noted that cooperation in the field of energy would cover renewable energy sources and hydrogen, as the Kingdom is investing in the transition towards carbon neutrality through its Saudi Green Initiative, while Italy has extensive experience in all types of renewable energy sources.

The Italian ambassador stressed that the Saudi-Italian political dialogue was aimed at addressing relevant international issues within the framework of the G20 joint action and security challenges that affect both countries in the Mediterranean and the Middle East. In this context, he pointed to a memorandum of understanding on strategic dialogue signed last year between Saudi Foreign Minister Prince Faisal bin Farhan and his Italian counterpart Luigi Di Maio.

“Italy has always imported oil from the Kingdom at an estimated level. In general, 80 percent of Italian imports are oil and petrochemical products, while many Italian companies support Saudi Aramco’s operations at various levels,” he told Asharq Al-Awsat. He noted that Saudis were interested in Italian-made products, such as food, fashion and interior design.

Cantone added that infrastructure was another very important area of cooperation.

He said that as part of investments planned within Saudi Vision 2030, many Italian construction companies were applying to tenders launched by the government to develop the giga-projects, as well as Saudi projects in the field of sustainable mobility and connectivity.

Regarding imports from Saudi Arabia, the diplomat noted that the stock market depended on the direction of the oil sector. He said that imports declined during the pandemic, but stressed that recovery was now on the right track, with imports amounting to 4.8 billion euros in 2021, compared to 2.9 billion euros in 2020.

The level of trade exchange remained essentially unchanged despite the coronavirus pandemic, amounting to 3.1 billion euros in 2020 and 3.3 billion euros in 2021, according to Cantone, who said that last year, the total balance was in favor of the Kingdom, while it is likely to remain the same in 2022, given the current high oil price per barrel.

“Our bilateral relationship is also based on an important economic partnership, taking into account the number of Italian firms that show a tangible interest in Vision 2030 and invest in the Kingdom by opening branches or new companies,” the ambassador remarked.

By FuellCellWorks, June 17, 2022

The petroleum ministry said in a statement on Sunday.

Egypt plans to set up new area for crude oil storage in El- Tebbin, south of Cairo, the petroleum ministry said in a statement on Sunday.

The project, with an estimated cost of 1.8 billion Egyptian pounds ($96.21 million), aims to receive crude from Ain Sokhna terminal on the red sea and pump it to Upper Egypt.

ZAWYA by Ahmed Ismail, June 17, 2022

ABB, working alongside Hyundai Engineering and Técnicas Reunidas, has been employed to install their market-leading distributed control system (DCS) ABB Ability™ System 800xA at the new Olefin III complex in Plock, Poland.

Integrating ABB Ability™ System 800xA control architecture across the entire mega-development, PKN Orlen will be able to constantly monitor and analyze plant productivity, maximize asset performance, manage power consumption, ensure product quality, and optimize process efficiency in real-time.

Harnessing this continuous stream of data, the company, in line with its objective to achieve a 30 percent reduction in CO2 emissions per ton of product, will be able to make more accurate, informed decisions to drive efficient use of energy. This includes maintaining tight controls over raw material consumption, plant energy levels, and waste by-products. 

 “As part of our sustainability strategy, ABB is committed to supporting our customers in reducing their annual CO₂ emissions by more than 100 megatons by 2030. Combining our expertise in the market alongside our leading DCS technology for complex plant operations we can help PKN Orlen to maximize its return on investment,” said Brandon Spencer, President of ABB Energy Industries. 

Alongside the DCS, ABB will also deliver several systems aimed at ensuring the complex operates at optimum safety levels, including a Burner Management System (BMS), an Emergency Shutdown System (ESD), and High-Integrity Pressure Protection System (HIPPS). These will be complemented by an industrial cyber security solution focused on mitigating cyber threats towards the complex. 

Olefins from the base compound made up of hydrogen and carbon produce a mix of everyday products including cleaning, hygiene, and medical products, including the synthetic fibers used in protective clothing and masks (PPE). The global market was valued at USD 232.45 Billion in 2020, and it is expected to grow at an annual rate of 4.5 percent reaching a value of USD 329.30 Billion by 2028. This exponential growth is driven by consumer demand and increased use across the global plastics industry. 

The project is scheduled for completion in 2024 with operations due to start in 2025. To support this timeline ABB will apply its unique project methodology Adaptive Execution™. Adaptive Execution™ harnesses virtual engineering and digitalization to deliver a streamlined, standardized, and agile experience for all stakeholders. Through this methodology, ABB can lower delivery time by up to 30 percent, start-up hours by up to 40 percent, and overall automation-related capital costs by up to 40 percent.

ABB is a leading global technology company that energizes the transformation of society and industry to achieve a more productive, sustainable future. By connecting software to its electrification, robotics, automation, and motion portfolio, ABB pushes the boundaries of technology to drive performance to new levels. With a history of excellence stretching back more than 130 years, ABB’s success is driven by about 105,000 talented employees in over 100 countries.

THE OGM by Tina Olivero, June 17, 2022

The oil giant is pumping billions of dollars into a plan to clean up the oil patch’s emissions profile.

ExxonMobil doesn’t believe fossil fuels will become extinct. It sees oil and gas playing a vital role in fueling the economy in the future, even as the adoption of cleaner alternatives accelerates. That’s partly due to their lower relative costs and the huge technological leaps needed before replacement fuels like green hydrogen become commercially viable.

Another reason Exxon sees a future for fossil fuels is that it can lower its carbon emissions profile through carbon capture and storage. The oil giant foresees a $4 trillion market opportunity by 2050 for cleaning up the oil patch.

What is carbon capture and storage?

Carbon capture pulls carbon dioxide emissions from fuel combustion and industrial processes out of the air so that it doesn’t get into the atmosphere and negatively impact the climate. The captured carbon dioxide then moves on pipelines or ships to underground geological formations for storage. There’s also the potential to reuse captured carbon dioxide for other purposes.  

One potentially major market for captured carbon dioxide is a process known as enhanced oil recovery (EOR). Oil companies, including Exxon, Occidental Petroleum (OXY -5.76%), Denbury Resources, and Kinder Morgan, pump carbon dioxide into legacy oil formations to increase pressure, resulting in higher production. Many of these companies currently use carbon dioxide produced from underground reservoirs for EOR. However, they’re increasingly seeking out captured carbon for EOR purposes.

In addition to EOR, potential uses of captured carbon include manufacturing other fuels like synthetic jet fuel and making building materials like concrete.

Betting big on carbon capture and storage

While carbon dioxide has a range of potential uses, the initial focus of Exxon and others in the energy sector is on sequestering it underground. The company is investing more than $15 billion over the next six years to lower greenhouse gas emissions through carbon capture and storage, hydrogen, and biofuels. It’s already the world leader in carbon capture, pulling more carbon dioxide out of the air than any other company. 

However, it has grand ambitions to build an even larger carbon capture and storage business. For example, Exxon is working on an up to $100 billion plan to capture carbon produced by petrochemical plants, power generating facilities, and other heavy industries along the Houston Ship Channel. The plan would see industrial facilities install devices to capture carbon dioxide before it leaves their plants. They could either use it to develop products or transport it via pipelines to the Gulf of Mexico, where it will get injected into sub-sea formations. 

Exxon is also looking into developing a large-scale carbon capture and storage hub in Australia. It would capture emissions produced by industries in the Gippsland Basin and transport the carbon dioxide to a depleted oilfield off the country’s coast via existing pipelines. 

Growing interest in capturing carbon

Exxon is one of many energy companies working on developing carbon capture and storage projects. EnLink Midstream (ENLC -6.96%) and Talos Energy (TALO -5.43%) are working to jointly develop a complete carbon capture, transportation, and sequestration solution for industrial-scale carbon dioxide emitters along the Mississippi River. The proposed project would use significant portions of EnLink’s pipelines in the region to transport captured carbon dioxide and move it to Talos’ River Bend sequestration site in Louisiana.

Meanwhile, EnLink and Enterprise Products Partners (EPD -5.14%) are working with a subsidiary of Occidental Petroleum on potential carbon capture and storage solutions. EnLink’s project with Occidental would focus on another section of the Mississippi River corridor, while Enterprise Products Partners is working on developing a project along the Houston Ship Channel. The midstream companies would provide existing and new pipelines to transport captured carbon to sequestration hubs operated by Occidental Petroleum. 

Carbon capture could keep the oil patch from going extinct

ExxonMobil believes carbon capture and storage is an answer to the world’s energy problem. It can make fossil fuels much cleaner while keeping the costs low compared to alternative fuels. That’s leading the oil giant to bet big on the future of carbon capture. If it’s correct, that wager could pay big dividends by enabling it to continue producing oil and gas while earning meaningful income from carbon capture and storage.

The Motley Fool by Matthew DiLallo, June 17, 2022

India and other Asian nations are becoming an increasingly vital source of oil revenues for Moscow despite strong pressure from the U.S. not to increase their purchases, as the European Union and other allies cut off energy imports from Russia in line with sanctions over its war on Ukraine.

Such sales are boosting Russian export revenues at a time when Washington and allies are trying to limit financial flows supporting Moscow’s war effort.

A report by the Helsinki, Finland-based Centre for Research on Energy and Clean Air, an independent think tank released Monday said Russia earned 93 billion euros ($97.4 billion) in revenue from fossil fuel exports in the first 100 days of the country’s invasion of Ukraine, despite a fall in export volumes in May.

“Revenue from fossil fuel exports is the key enabler of Russia’s military buildup and aggression, providing 40% of federal budget revenue,” it said.

India, an oil-hungry country of 1.4 billion people, has guzzled nearly 60 million barrels of Russian oil in 2022 so far, compared with 12 million barrels in all of 2021, according to commodity data firm Kpler. Shipments to other Asian countries, like China, have also increased in recent months but to a lesser extent.

In an interview with The Associated Press, Sri Lanka’s prime minister said he may be compelled to buy more oil from Russia as he hunts desperately for fuel to keep the country running amid a dire economic crisis.

Prime Minister Ranil Wickremesinghe said Saturday said he would first look to other sources, but would be open to buying more crude from Moscow. In late May, Sri Lanka bought a 90,000-metric-ton (99,000-ton) shipment of Russian crude to restart its only refinery.

Russia is moving to diversify its exports. Russian Ambassador Marat Pavlov met Philippine President-elect Ferdinand Marcos Jr. on Monday and offered Moscow’s help to provide oil and gas. He did not specify the terms.

Marcos Jr., whose six-year term is set to begin June 30, did not say if he was considering the offer.

Since Russia’s invasion of Ukraine in late February, global oil prices have soared, giving refiners in India and other countries an added incentive to tap oil Moscow is offering them at steep discounts of $30 to $35, compared with Brent crude and other international oil now trading at about $120 per barrel.

Their importance to Russia rose after the 27-nation European Union, the main market for fossil fuels that supply most of Moscow’s foreign income, agreed to stop most oil purchases by the end of this year.

“It seems a distinct trend is becoming ingrained now,” said Matt Smith, lead analyst at Kpler tracking Russian oil flows. As shipments of Urals oil to much of Europe are cut, crude is instead flowing to Asia, where India has become the top buyer, followed by China. Ship tracking reports show Turkey is another key destination.

“People are realizing that India is such a refining hub, taking it at such a cheap price, refining it and sending it out as clean products because they can make such strong margins on that,” Smith said.

In May, some 30 Russian tankers loaded with crude made their way to Indian shores, unloading about 430,000 barrels per day. An average of just 60,000 barrels per day arrived in January-March, according to the Centre for Research on Energy and Clean Air.

Chinese state-owned and independent refiners also have stepped up purchases. In 2021, China was the largest single buyer of Russian oil, taking 1.6 million barrels per day on average, equally divided between pipeline and seaborne routes, according to the International Energy Agency.

While India’s imports are still only about a quarter of that, the sharp increase since the war began is a potential source of friction between Washington and New Delhi.

The U.S. recognizes India’s need for affordable energy, but “we’re looking to allies and partners not to increase their purchases of Russian energy,” Secretary of State Antony Blinken said after a meeting of U.S. and Indian foreign and defense ministers in April.

Meanwhile, the U.S. and its European allies are engaged in “extremely active” discussions on coordinating measures, perhaps forming a cartel, to try to set a price cap on Russian oil, Treasury Secretary Janet Yellen told a Senate Finance Committee meeting on Tuesday.

The aim would be to keep Russian oil flowing into the global market to prevent crude oil prices, already up 60% this year, from surging still higher, she said.

“Absolutely, the objective is to limit the revenue going to Russia,” Yellen said, indicating the exact strategy had not yet been decided on.

While Europe could find alternative sources for its purchases of about 60% of Russia’s crude exports, Russia also has options.

India’s foreign minister, Subrahmanyam Jaishankar, has emphasized his country’s intention to do what is in its best interests, bristling at criticism over its imports of Russian oil.

“If India funding Russian oil is funding the war … tell me, then buying Russian gas is not funding the war? Let’s be a little even-handed,” he said at a recent forum in Slovakia, referring to Europe’s imports of Russian gas.

India’s imports of crude from Russia rose from 100,000 barrels per day in February to 370,000 a day in April to 870,000 a day in May.

A growing share of those shipments displaced oil from Iraq and Saudi Arabia, most of it going to refineries in Sika and Jamnagar on India’s western coast. Up until April, Russian oil accounted for less than 5% of the crude processed at the Jamnagar oil refinery run by Reliance Industries. In May, it accounted for more than a quarter, according to Centre for Research on Energy and Clean Air.

India’s exports of oil products like diesel have risen to 685,000 barrels per day from 580,000 barrels per day before the invasion of Ukraine. Much of its diesel exports are sold in Asia, but about 20% was shipped via the Suez Canal, headed for the Mediterranean or Atlantic, essentially Europe or the US, said Lauri Myllyvirta, a lead analyst at CREA.

It’s impossible to quantify the exact amount of Russian crude in refined products being shipped out of India, he said. Still, “India is providing an outlet for Russian crude oil to get through the market,” he said.

China’s imports also have risen further this year, helping Russian President Vladimir Putin’s government record a current account surplus, the broadest measure of trade, of $96 billion for the four months ending in April.

It’s unclear if such exports might eventually be subject to sanctions meant to cut the cash flowing to Russia.

Regarding the sanctions, “Are those measures effective? And if not, how is the oil market working around them?” Myllyvirta said.

By AP NEWS, June 14, 2022

Three South Korean companies have signed an agreement to build a $1 billion green hydrogen and ammonia production plant in the United Arab Emirates, their UAE partner said on Friday.

Korea Electric Power Corporation, Samsung C&T Corporation and Korea Western Power, alongside the UAE’s Petrolyn Chemie, will build a plant that can produce up to 200,000 tonnes of green ammonia a year, Petrolyn said.

Green hydrogen – obtained by passing renewably-produced electricity through water to split the element from oxygen – has been touted by some as a key fuel for energy users looking to cut greenhouse gas emissions.

Both the UAE and neighbor Saudi Arabia have set out ambitious plans for hydrogen.

The plant will be built in two phases in the KIZAD Industrial Area near the capital Abu Dhabi, with the first phase producing 35,000 tons before the second phase takes the project to full scale.

“Participating companies will achieve their respective Net-Zero vision through the Project. They are expected to…expand the drive of future growth in the global green hydrogen market by expanded reproduction of their future business model,” Petrolyn said.

By ALARABIYA, June 7, 2022