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Shell, Chevron and Petrobras weigh Guyana oil auction bids -sources



Shell, Chevron and Petrobras weigh Guyana oil auction bids -sources
© Reuters. FILM PHOTO: A view shows a logo of Shell petrol station in South East London, Britain, February 2, 2023. REUTERS/May James


By Sabrina Valle and Marianna Parraga

HOUSTON (Reuters) – Guyana’s coming auction of offshore oil exploration blocks has lured at least 10 companies including Shell (LON:), Petrobras and Chevron , to consider the decade’s hottest oil region, people close to the matter said.

The South American country is offering 14 offshore blocks in an attempt to speed economic development and reduce an Exxon Mobil-led consortium’s dominance of its oil sector. Winning bidders are expected to be picked next month.

Guyana Vice President Bharrat Jagdeo on Monday spoke at the CERAWeek energy conference in Houston to drum up support for the country’s first competitive bidding round.

“We see this as big, transformative for our people. We are in a mad rush to get this done before net-zero comes,” he told Reuters, referring to the target to slash fossil fuel use by 2050.

He plans to meet with U.S. government officials, international and state-run oil firms while in Houston.

Companies interested in the April round have paid for seismic data to evaluate the blocks and decide whether to submit offers, according to the government. They include six big international producers, Energy Minister Vickram Bharrat has said, without identifying the companies.

None of the companies have decided on bids as they wait for the government to release contract terms, the people familiar with the matter said.

Guyana is considering a state investment firm that would hold stakes with partners in offshore blocks offered through government-to-government talks, Jagdeo said. The investment firm would not be an operator, he added.

Guyana estimates it has up to 25 billion barrels of oil and gas in place off its coast. A consortium that includes Exxon Mobil (NYSE:), Hess (NYSE:) and CNOOC (NYSE:) operates the country’s most important area, the 6.6-million-acre (26,800 sq km) Stabroek block, with more than 30 discoveries to date.

Exxon, QatarEnergy, Shell PLC, Chevron Corp (NYSE:) and Petrobras are among the oil giants that have paid $20,000 for the geologic information available on the 11 shallow water and three deep-water blocks, the people familiar with the matter said.

Chevron’s main interest is to gain access to Guyana’s geological data, three of the people said, noting the company has blocks in neighboring Suriname and Venezuela.

Exxon and QatarEnergy have said they are waiting for the full contract terms to consider a bid. Shell said it is evaluating the offshore lease sale to determine a possible participation. Chevron and Petrobras did not respond to requests for comment.

Guyana also has begun direct negotiations on the 14 blocks and other areas with governments that have state-controlled oil companies. Guyana also may reclaim up to 20% of Exxon’s biggest block and reoffer it in the future.

The Guyanese government expects firms like QatarEnergy to both bid on the April auction and engage in direct negotiations, Jagdeo told Reuters last month.

Graphic: Blocks on offer for Guyana’s 2023 licensing round


Guyana plans to issue a new Production Sharing Agreement (PSA) model for leasing offshore blocks by the end of this month, several weeks late. A draft proposal that would go through a two-week public consultation earlier missed its Feb. 13 release.

The auction will receive bids through April 14. According to the bidding round plan, the winners would be disclosed between late May and early June after an evaluation, Jagdeo said.

The proposed rules will nearly double the government’s take from oil production to 27.5% of royalties and profit oil, plus a new 10% corporate tax, compared to Exxon’s main contract.

The new agreement also will require producers provide more information to Guyana, the vice president said.

“We believe it is asymmetric now, and a bit in favor of the companies,” Jagdeo said. “We want more information to come from the oil and gas companies.”

The new agreement will request details of the production costs that companies deduct before splitting oil revenue with the country, he said. The Exxon group can now use 75% of the oil production to offset a variety of costs, including construction of its new Guyana headquarters.

The oil model also will set stricter terms for tendering and procurement, covering everything from production vessels to drilling suppliers. However, the terms will not affect Exxon’s Stabroek block.

“We are not renegotiating Stabroek,” Jagdeo said. “We don’t want to lose momentum.”

Graphic: Exxon ramps up oil production in Guyana

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French climate investments to drive up national debt burden – think-tank




French climate investments to drive up national debt burden - think-tank
© Reuters. FILE PHOTO: French President Emmanuel Macron visits Institut Curie laboratory ahead of announcements on biomedical research in Saint-Cloud, France, May 16, 2023. REUTERS/Benoit Tessier/Pool

PARIS (Reuters) – Investments that France needs to finance its transition to a low-carbon economy are set to add 25 percentage points to its debt burden by 2040, a report from the government-funded France Strategie think-tank said on Monday.

France will need to make additional annual investments of about 67 billion euros ($74 billion) – more than 2% of economic output – by 2030 to meet its objectives for reducing its dependence on fossil fuels, France Strategie calculated.

The think-tank, which is part of the prime minister’s office, said the financial effort would weigh heavily on public finances partly because the investments imply lower potential growth, which would cut tax revenues.

As a result, the debt burden would rise by 10 percentage points by 2030 and 25 percentage points by 2040, which France Strategie suggested might need to be financed in part by a temporary tax on wealthy households.

President Emmanuel Macron’s government has hoped to chip away in the coming years at France’s national debt, which currently stands at slightly more that 111% of gross domestic product after surging during the COVID crisis.

The report said the financial burden of investing in Europe’s energy transition also posed a risk in terms of international economic competition, as other major economies such as the United States and China were less concerned about budgetary constraints.

About 100 experts in French and European research groups as well as public French institutions participated in the report, which was led by economist Jean Pisani-Ferry, who previously helped Macron draft his economic programme.

($1 = 0.9084 euros)

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Crude oil largely flat; Caution ahead of debt ceiling meeting




Crude oil largely flat; Caution ahead of debt ceiling meeting
© Reuters — Oil prices traded largely unchanged Monday, with traders cautious ahead of the resumption of U.S. debt ceiling negotiations while supply concerns add support. 

By 09:30 ET (13:30 GMT), futures traded 0.1% lower at $71.59 a barrel, while the contract fell 0.1% to $75.52 a barrel.

U.S. President Joe Biden and Republican House Speaker Kevin McCarthy are set to meet later this session to try and agree on a deal to raise the more than $31 trillion debt ceiling.

Concerns that a failure to come up with an acceptable compromise have weighed heavily on the market over the recent weeks, as this would result in the U.S. defaulting on its debt obligations, likely plunging the global economy into recession.

The U.S. Treasury has warned that the government could run out of money to pay its bills as soon as June 1.

That said, both crude benchmarks managed to post gains last week, ending four straight weeks of heavy declines, helped by the U.S. starting to refill its Strategic Petroleum Reserve as well as the supply disruptions in Canada, due to early wildfires in the crude-rich Alberta province. 

Additionally, the latest data from showed the U.S. oil rig count fell by 11 over the last week, to its lowest count since June 2022.

“A slowdown in U.S. drilling activity is a concern for the oil market, which is expected to see a sizable deficit over the second half of the year,” said analysts at ING, in a note. 

“Producers appear to be responding to the weaker price environment, rather than expectations for a tighter market later in the year.”

This brings the Organization of Petroleum Exporting Countries and allies, known as OPEC+, firmly into focus, with its next meeting in early July. 

The cartel surprised the market with an output cut at the last meeting, which came into effect at the start of this month. However, this has done little to support crude prices, implying the members may be looking at a further reduction in production.

The fact U.S. producers are not increasing in number will be good news for OPEC+, ING added, “as it suggests that they will be able to continue supporting prices without the risk of losing market share to U.S. producers.”

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California grid operator signs off on $7.3 billion of power lines




California grid operator signs off on $7.3 billion of power lines
© Reuters. FILE PHOTO: A woman jogs by power lines, as California’s grid operator urged the state’s 40 million people to ratchet down the use of electricity in homes and businesses as a wave of extreme heat settled over much of the state, in Mountain View, Californi

(Reuters) – California’s electric grid operator has approved a plan expected to cost $7.3 billion for 45 new power transmission projects over the next decade and made it easier for new power plants in high-priority areas to connect to the grid.

The projects will support the development of more than 40 gigawatts (GW) of new generation resources, the California Independent System Operator (CAISO) said on Thursday.

“With electrification increasing in other sectors of the economy, most notably transportation and the building industry, even more new power will be required in the years ahead,” the CAISO said.

The vast majority of the transmission projects will be built in California, with some in neighboring Arizona, it said.

The power lines recommended by CAISO’s 2022-2023 Transmission Plan will allow the state’s grid to add more than 17 GW of solar resources, 8 GW of wind generation, 1 GW of geothermal development, and battery storage projects.

CAISO will prioritize connecting power plants to the grid in specific geographical zones identified by its plan where developing new power lines and plants “make the most economic and operational sense.”

The grid operator also approved proposed reforms to account for “increasing levels of net load forecast uncertainty between day-ahead and real-time markets … as the generation fleet evolves towards a cleaner, but more variable, resource mix.”

It projected that its transmission plan next year could include the need to add 70 GW of new power to the grid by 2033, rising to 120 GW as the state seeks to meet its goal of a carbon-free power system by 2045.

Power supply in the U.S. West is vulnerable to extreme heat as it relies on regional energy transfers to meet demand at peak or when solar output is diminished, the North American Electric Reliability Corp (NERC) said in its summer outlook on Wednesday.

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