Author: Ricardo Perez

Exxon Mobil will target annual project spending of between $22 billion and $27 billion through 2027, the oil major said in an update on Wednesday that largely continues existing spending and production goals.

The largest U.S. oil producer laid out plans to boost spending on nascent lithium and low carbon businesses by 18% throughout 2027.

Its presentation, however, left out details of projected gains from the $60 billion acquisition of Pioneer Natural Resources that is expected be completed in the first half of 2024, and shares closed down more than 1%.

Company executives also said most profits from its push into energy transition businesses including carbon dioxide abatement and storage and lithium production would come after 2027. Profits from those units also will depend on government help through regulations and infrastructure.

“All those things are coming together,” said CEO Darren Woods. “But until they ultimately land, and we know what we’ve got” the outlook will remain “less certain.”

“Exxon will need to convince investors on the merits of the low-carbon spending from here,” said Biraj Borkhataria, an equity analyst at RBC Capital in a note.

The annual forecast is watched closely by investors for its spending and production targets. This year’s outlook was keenly anticipated because of deals for Pioneer and carbon pipeline firm Denbury, both of which will underpin long-range targets.

Exxon announced plans to buy Pioneer in October for nearly $60 billion in an all-stock deal, saying it plans to more than triple its production in the top U.S. shale field to 2 million barrels per day (bpd) by 2027. Denbury was a $4.9 billion acquisition to buttress its carbon business.

Exxon’s estimated production growth for next year excludes more than 700,000 bpd it would gain from the Pioneer acquisition. That deal would double Exxon’s Permian shale oil and gas output to about 1.3 million bpd, the company has said.

Government Support
Exxon’s spending outlook will raise outlays for its energy transition unit, called Low Carbon Solutions, to $20 billion between 2022 and 2027, from $17 billion. But the higher spending will require government support.

“We need technology-neutral durable policy support, transparent carbon pricing and accounting, and ultimately, customer commitments to support increased investment,” Woods said.

Exxon will increase its share buybacks to $20 billion annually through 2025, from $17.5 billion currently, after the Pioneer merger closes, the company said. An ongoing divestment plan for its refining operations also will continue.

Analysts said excluding any contributions from the Pioneer deal, the company’s oil and gas targets were below expectations and its spending forecast higher than expected.

Analysts also anticipate a delayed production start-up at Exxon’s liquefied natural gas (LNG) Golden Pass plant to 2025, following the company’s updated goal for mechanical completion by the end of 2024.

Annual project expenditures could hit $32 billion by 2027, above market expectations, assuming an incremental $4 billion-$5 billion in spending on Pioneer’s assets, RBC Capital said.

Exxon projected earnings and cash flow to rise through 2027 by $14 billion on a combination of cost cutting, higher oil output from Guyana and U.S. shale and gains in its refining and chemicals business. The company is forecast to earn $37.2 billion this year, according to financial firm LSEG.

Increase cash flow will come from higher earnings and a new $6 billion cost reduction target through the end of 2027. The company slashed project spending and overhead after suffering a historic $22 billion annual loss in 2020.

Shala, Guyana Oil Gains
Exxon forecasts production of 3.8 million barrels of oil equivalent per day (boepd) in 2024, from 3.7 million this year, as it bets on a lift from the Permian shale basin and Guyana.

Spending on new projects will expand to between $23 billion and $25 billion next year, with a range that has a mid-point spending of $24.5 billion annually from 2025 through 2027.

Reuters, Sabrina Valle, December 6, 2023

Some 50 oil and natural gas producers, including Saudi Aramco and 29 other national oil companies, have signed an agreement to reduce their carbon emissions to net zero by 2050 and curb methane emissions to near-zero by 2030, the COP presidency of the UN Climate Change Conference in Dubai said Dec. 2.

“If we want to accelerate progress across the climate agenda, we must bring everyone in to be accountable and responsible for climate action,” said Jaber. “We must all focus on reducing emissions and apply a positive can-do vision to drive climate action and get everyone to take action. We need a clear action plan, and I am determined to deliver one.”

The agreement is part of a Global Decarbonization Accelerator launched at COP28, focused on three pillars: energy systems of the future such as renewables and hydrogen; the fossil fuel sector and emission-intensive industries; and methane.

Under the oil and gas pillar, the industrial transition accelerator will focus on decarbonization across key heavy-emitting sectors: cement, aluminum, steel, oil and gas, power and aviation/maritime.

The 50 oil and gas companies account for 40% of global oil production. The net zero commitment relates to scope 1 and 2 emissions, a COP28 presidency spokesman said.

Key national oil companies such as Kuwait Petroleum Corporation, QatarEnergy, Iraq’s State Oil Marketing Company, China’s Sinopec, CNOOC and PetroChina, and the National Iranian Oil Company, were missing from this list.

This comes as many investors and activists, don’t believe the industry has done enough and they have doubled down on efforts to put these companies under pressure. Many fossil fuel producers will be forced to balance the need to maximize shareholders’ financial returns with pressures to decarbonize.

Methane challenge
On methane, the agreement sees the 50 companies commit to setting interim targets that would reduce methane emissions to 0.2% of oil and natural gas production by 2030, and to end routine flaring.

What makes this pledge distinctive is that it will be scrutinized using technology and data.

The United Nations Environment Program’s International Methane Emissions Observatory (IMEO), the Environmental Defense Fund and the International Energy Agency will help monitor compliance by tracking methane emissions using satellite data, and other analytical tools.

Fred Krupp, president of the non-profit advocacy group the Environmental Defense Fund, said the pledge had the potential to be the most impactful climate action in over three decades.

“It could lower the planet’s temperature and reduce cataclysmic storms from what we will otherwise experience in the next decade,” he said.

Methane accounts for 45% to 50% of oil and gas emissions, 80% of it from upstream, the spokesperson said. The methane pledge includes zero routine flaring by 2030, he added.

The US and China will separately continue their conversation on methane reduction, a spokesman for the COP28 presidency said.

The energy sector — including oil, natural gas, coal and bioenergy — accounts for nearly 40% of methane emissions from human activity.

MPC demand low
Methane emissions generated by production are a significant contributor to the carbon intensity of natural gas.

Platts, part of S&P Global Commodity Insights, assesses methane performance certificates traded in the spot market that represent low methane emissions in natural gas production in the US and Canada.

Each MPC represents 1 MMBtu of gas with zero methane emissions produced. Platts reflects MPCs that have been issued against production that has a methane intensity of less than 0.10%.

Prices have fallen to just $0.01/MPC in recent months with very little demand for the certificates at present.

Many countries and governments are gradually starting to enforce measures to curtail methane leaks and emissions.

In November, the EU reached a landmark political agreement on a regulation for tracking and reducing methane emissions in the energy sector — the first-ever EU law to curb methane emissions.

Similarly, in early-November, China issued an action plan to control methane emissions that establishes a broad framework for measurement and identifies selected industries for future implementation.

According to the International Energy Agency, if all methane leaks from fossil fuel operations in 2021 had been captured and sold, then gas markets would have been supplied with an additional 180 Bcm of gas.

The IEA said that was equivalent to all the gas used in Europe’s power sector. Marketing gas that is lost would also be profitable for producers given sustained high international gas prices.

Signatories to the Oil and Gas Decarbonization Charter
National oil companies (NOCs)
International oil companies (IOCs)
ADNOC
Azule Energy
Bapco Energies
BP
Ecopetrol
Cepsa
EGAS
COSMO Energy
Equinor
Crescent Petroleum
GOGC
Dolphin Energy
INPEX
Energean Oil & Gas
KazMunaiGas
Eni
Mari Petroleum
EQT Corp.
Namcor ExxonMobil
NOC (Libya)
ITOCHU
Nilepet
Lukoil
Nigerian National Petroluem Corp.
Mitsui
OGDC
Oando
OMV
Occidental Petroleum
ONGC
Puma Energy (Trafigura)
Pakistan Petroleum
Repsol
Pertamina
Shell
Petoro
TotalEnergies
Petrobras
Woodside Energy Group
Petroleum Development Oman
Petronas
PTTEP
Saudi Aramco
SNOC
SOCAR
Sonangol
Uzbekneftegaz
ZhenHua Oil
YPF

S&P Global Eklavya Gupte, Claudia Carpenter, Ivy Yin, Jennifer Gnana, December 5, 2023

Registration is now open for StocExpo 2024, the internationally recognised meeting-place for 3,700+ tank storage and energy infrastructure professionals.

In partnership with the Federation of European Tank Storage Associations (FETSA), the conference & exhibition will feature two conference theatres, a terminal tour, the Global Tank Storage Awards ceremony and a packed exhibition floor full of the latest storage innovations.

Once a year the industry comes together in Rotterdam to learn new approaches to improve operations, discover innovative solutions to make storage infrastructure safer, and to network with leading industry professionals.

Margaret Dunn, Portfolio Director at StocExpo, says, “We’re always excited at this time of year, when the countdown to StocExpo begins. It’s the single most important event for the tank storage industry, where ideas are shared, deals are brokered, and decisions are made which influence the future of the sector.”

With the energy transition well underway, StocExpo aims to address the industry’s ongoing challenge to develop safe and cost-effective future fuels storage infrastructure.

This year’s conference programme will feature a range of expert speakers including Bowen Xu, Director of Corporate Development & Investments at OCI, Tamme Wekkes, Business Development Director for Koole Terminals, Aivars Starikovs, Member of the Board for European Hydrogen Council, Bruni Hayem, CEO of Rubis Terminal and many more.

Topics covered include tackling the energy trilemma, what the energy transition looks like in Asia and the Middle East and the impact of the evolving geopolitical landscape on the storage sector.

A second conference theatre geared towards asset and maintenance managers will feature engaging speakers covering a variety of topics including safety best practices, digitilisation and how to future-proof your terminal.

“The floorplan is packed with disruptive technologies as well as equipment that is essential to every terminal operator,” Dunn adds. “With late-night networking opportunities, the Global Tank Storage Awards ceremony and the iTanks pitch lunch, there are countless opportunities to network and celebrate excellence in our industry. We can’t wait to see you there.”

StocExpo, December 5, 2023

Today, Vopak provides an update on its portfolio related to the successful completion of the 50% acquisition of EemsEnergyTerminal and completion of the sale of the three chemical terminals in Rotterdam.

This update is in line with the Vopak strategy to improve its financial and sustainability performance, to grow its base in industrial and gas terminals, and to accelerate towards new energies and feedstocks.

Acquisition 50% EemsEnergyTerminal
Vopak has completed the principle agreement that was announced in April 2023 and has become a 50% shareholder in EemsEnergyTerminal, an LNG import terminal of 8 billion cubic meter (bcm) per year located in the Eemshaven in the Netherlands. This terminal has been operational since September 2022.

Gasunie and Vopak are working to increase the capacity further towards 10 bcm per year, highlighting the commitment of the partners to jointly develop and operate open access LNG infrastructure and contribute to the energy security of Europe. The partners are planning the further development of the Eemshaven site to facilitate the import of green hydrogen.

The total investment by Vopak to acquire 50% of EemsEnergyTerminal is just above EUR 80 million with cash out in two installments in Q4 2023 and in Q2 2024. This acquisition will positively contribute to Vopak’s operating cash return for the remainder of the year and has limited impact on the Vopak full year 2023 EBITDA outlook.

Sale of three chemical terminals in Rotterdam
Vopak has completed the sale of its three chemical terminals in Rotterdam (Botlek, TTR and Chemiehaven) to Infracapital for a total purchase price of EUR 407 million including a conditional deferred payment of EUR 19.5 million. Total cash receipt net of transaction costs and net debt items at closing is EUR 372 million. The combined operational capacity of the three terminals is 1.4 million cbm. This follows our announcements on the strategic review on 15 February 2023 and on the agreement for sale on 19 September 2023.

Dick Richelle, CEO of Vopak: “The successful completion of this acquisition and divestment supports our strategic goals and positions the portfolio towards higher and long term cash returns. It grows our footprint in gas and gives the opportunity to accelerate towards new energies in the future. Vopak’s unique global portfolio and partnerships strategically position us to leverage the strong market fundamentals and energy transition opportunities. We are proud to be leading the way in providing infrastructure solutions that are and will be essential to the economy and the daily lives of people around the world.”

Vopak, December 1, 2023

Exxon Mobil will complete a $1 billion expansion of diesel production at its Fawley UK oil refinery next year, a key step in curbing the country’s reliance on imports.

The oil major also announced plans to add a new hydrogen plant at Britain’s biggest oil-processing complex, potentially paving the way for the production of sustainable aviation fuel. That unit will run on natural gas, Exxon said.

Exxon (NYSE:XOM) has been working for years on the Fawley diesel facility, which was put on hold when the Covid pandemic prompted a collapse in fuel demand and refining margins. That’s since reversed in Europe, with the profit from turning crude oil into diesel holding above historical averages after sanctions on Russia deprived the region of its biggest external supplier.

The refinery on England’s south coast will boost output of low-sulfur diesel by 40%, the company said in a statement. The project, dubbed Fast, will reach full production in 2025, when the Grangemouth refinery in Scotland is scheduled to stop making the fuel.

While UK diesel demand has struggled to return to pre-pandemic levels, the nation relies on imports for up to about half of its consumption. The Fawley project could help to cut imports by as much as a quarter, according to Exxon.

First production from the expansion will be available in 2024. Exxon had forecast an increase of almost 45%, or 38,000 barrels a day, in ultra-low sulfur diesel output, when it took the final investment decision in 2019.

The hydrogen plant at Fawley would be part of what’s known as the Solent cluster, which brings together companies looking at decarbonizing industry.

Exxon Mobil was awarded funding from the UK government earlier this month to look at the production of sustainable aviation fuel at Fawley, which is linked to London’s Heathrow airport by pipeline.

If the project proceeds, it could provide the UK with 20% of its SAF needs by 2030, according to a statement at the time.

Energy Voice, December 1, 2023

Octopus Energy Group today announces it has completed the acquisition of Shell Energy Retail in the UK and Germany from Impello Limited, a subsidiary of Shell Petroleum Company Limited.

The green energy provider will start the technical process of migrating 1.3 million home energy customers to its systems in the UK and Germany from 1 December. The migration is expected to be completed in mid 2024.

This will grow Octopus to 6.6 million household customers in the UK (over 11 million meter points). Its customer base in Germany will grow to almost 300,000. As part of the deal, Octopus has also acquired almost 500,000 Shell broadband customers.

Shell Energy Retail customers should sit tight for now, as they will be contacted in the next few days with further details of the move. There will be a “smooth transition and no disruption” to energy supply. Credit balances are protected and will automatically be transferred to customers’ new accounts with Octopus together with existing direct debits.

Octopus has a strong track record in large-scale customer migrations through its proprietary tech platform Kraken, and has already operated over 30 since launch. To ensure a smooth transition, customers are advised to not switch midway through the migration process as this could affect their service and move to their new energy supplier.

As part of the deal, Shell and Octopus have also decided to deepen the relationship between Electroverse, Octopus’ EV chargepoint roaming service, and Shell Recharge stations.

The pending agreement will see Electroverse customers benefit from offers at Shell forecourts and Shell Recharge EV subscriptions, enabling them to make use of the most premium Fast Charging network in the UK.

Greg Jackson, founder of Octopus Energy Group, commented: “We are pleased to be the new home for Shell Energy Retail customers in the UK and Germany. Now even more customers can receive our five star customer service and choose from a whole heap of cheap, green tariffs, benefitting both their pockets and the energy system.

“Our commitment to customers is paramount, and we will deliver the Octopus promise when we welcome these new customers too.”

Octopus is headquartered in London and operates in 17 countries, with significant businesses in energy retail, generation, technology, heat pumps and electric vehicles. It has received well over £1bn in investment from global giants, including investment funds, pension funds and large energy companies.

Octopus Energy, December 1, 2023