WHAT’S HAPPENING TODAY: Good afternoon and happy National Agriculture Day, Daily on Energy readers! 🧑🌾🌽🐂🐄🌱
There are few or no signs of de-escalation in the Middle East, with further disruptions to global oil and gas supply on the horizon, as QatarEnergy declared force majeure on some of its European and Asian LNG contracts. 🇶🇦 Keep reading to learn more.
Plus, you may have seen last night that there was an explosion at an oil refinery in Texas. Fires at the facility have been put out and shelter-in-place orders lifted, but it has yet to be seen how the incident could further put upward pressure on already surging gasoline prices. ⛽📈💲 We’ll be following the fallout closely.
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QATARENERGY DECLARES FORCE MAJEURE: Qatar’s state-owned energy company, QatarEnergy, declared force majeure on some long-term liquefied natural gas contracts, affecting customers in Europe and Asia.
It was reported earlier today by Al Jazeera that the company is invoking force majeure on some LNG contracts to customers in Italy, Belgium, South Korea, and China.
QatarEnergy’s LNG facilities have endured attacks by Iran since the war started. The latest attack was last week when Iranian missiles hit several LNG facilities at Ras Laffan Industrial City. The company at the time warned that damage to the facilities would take up to five years to repair, compelling it to declare force majeure.
The recent move by QatarEnergy further tightens the global supply of LNG, specifically in Europe and Asia. Ras Laffan is the world’s largest LNG export plant, making up nearly 20% of global LNG supply.
Read more by Maydeen here.
LATEST ON PRICES: Oil prices ticked back up again today, as there continue to be conflicting accounts on negotiations between the U.S. and Iran, leaving traders cautious over whether an agreement will be made to end the war.
Both international and domestic benchmarks were up by more than 2% just before 3 p.m. EDT, with Brent Crude rising by 2.79% to sit at $102.70 per barrel. West Texas Intermediate also jumped by 4.08% and was priced at $91.73 per barrel.
The massive market selloff seen yesterday could keep gasoline prices from hitting $4 a gallon this week, though it’s getting extremely close. GasBuddy reported this afternoon that the average price of gasoline nationwide was at $3.982 per gallon.
DEMOCRATS USE HIGH GAS PRICES FOR GOP ATTACK ADS: Democrats are taking advantage of high gasoline prices for their own messaging leading up to the November midterm elections in a new digital ad campaign.
The Democratic Congressional Campaign Committee is launching the campaign on Tuesday, specifically blaming President Donald Trump and Republicans for the soaring prices at the pump.
The ad, first seen by CNBC, runs about six seconds long. It’s leaning on simple messaging, showing prices at a gas pump rising before ending with text that reads: “D.C. Republicans Did That!”
The campaign will be targeting voters on Facebook and Instagram, and will reportedly geotarget those who are at or near gas stations in 44 districts the DCCC considers to be “in play” in the elections. These districts span 23 states, including Alaska, California, Texas, Florida, and New York.
SOUTHEAST ASIA RETHINKS LONG-TERM ENERGY SECURITY: The war in Iran is having limited effect on Southeast Asia’s power markets but is reshaping the region’s long-term energy planning.
Southeast Asia’s fixed prices and long-term LNG supply deals have spared the region from near-term price shocks during the conflict in Iran, according to WoodMackenzie, but officials are rethinking energy security nonetheless.
“While Southeast Asia is relatively insulated from immediate price shocks, the current crisis is a clear reminder of the region’s structural exposure to global fuel markets,” said Yanqi Cao, senior analyst, Asia Pacific power and renewable research at Wood Mackenzie.
“Energy security is moving back to the top of the agenda, and this will have lasting implications for how power systems evolve in the region,” Cao said.
WoodMackenzie said that Southeast Asia could see a rise in gas and LNG prices through the second quarter, but it will likely be manageable. Singapore and the Philippines are likely to feel the effects the earliest.
It added that, if fuel prices stay high, most of the region’s markets will have limited ability to shift away from gas and LNG. WoodMackenzie also noted that prolonged disruptions in the energy sector will likely shift policy and investment toward nuclear power and firmed renewable energy.
TEXAS REFINERY EXPLOSION – WHAT WE KNOW: One of the largest oil refineries in the U.S. was set ablaze yesterday after an explosion.
What happened: Late yesterday afternoon, an explosion was heard coming from Valero’s Port Arthur oil refinery, roughly 90 miles east of Houston.
The incident sent towering clouds of black smoke and flames into the sky, and prompted a shelter-in-place order for parts of the city. Some residents several miles away from the facility reported hearing a large boom and felt their homes shake. Officials also shut down part of a highway in the immediate area in response.
The cause of the explosion remains unclear.
According to Valero, the refinery employs roughly 770 people and processes around 435,000 barrels per day. It specifically processes heavy sour crude and refines it into gasoline, diesel, and jet fuel.
Were there injuries? Officials have said there were no injuries or fatalities as a result of the explosion. Port Arthur Mayor Charlotte Moses also told CBS News that there were no immediate air quality issues as of Monday night.
What is the current status? The shelter-in-place order was lifted early this morning, and the closed section of the highway was reopened.
Democratic State Rep. Christian Manuel revealed on Facebook last night that the Texas Commission on Environmental Quality was on site with air monitoring equipment and was working alongside local and state officials.
Around midday today, Manuel shared another update, saying he spoke with TCEQ to learn more about what chemicals were involved in the fire caused by the explosion. He did not offer any details on what the agency told him, but said his office is still gathering information.
“I’m in contact with local officials,” Manuel wrote. “I know there’s confusion right now, and people want answers. My office is looking closely at what happened and what it could mean moving forward.”
It remains unclear whether the incident will significantly contribute to rising gas prices, as some analysts have indicated that the major market losses seen yesterday might offset disruptions at the Texas facility.
CERAWEEK – DAY TWO: The energy industry’s top executives will be gathered in Houston until this Friday for CERAWeek – that is if they can get out, as TSA lines in the area grow longer and longer. Here’s what we’ve been watching out of the second day of the conference.
Kuwait ramping back up: Shaikh Nawaf Al-Sabah, the CEO of the Kuwait Petroleum Corporation, addressed conference attendees via video this afternoon. He slammed Iran for attacking energy infrastructure in the Persian Gulf, attacks that have forced the country to cut its oil production and refining capacity.
Though, if the war were to end, he is confident they could resume normal production levels fairly quickly. He specifically said the company would be able to hit full production capacity in three to four months, according to Reuters.
Alaska LNG back in focus: The state of Alaska has been thrust to the center of the Trump administration’s energy policy, as officials look to increase oil and gas production up North. This is all tied to a long-awaited, and controversial, liquefied natural gas pipeline that would stretch the length of the state.
Energy Secretary Chris Wright has called the LNG project “probably our single most important energy infrastructure project of this whole administration,” Axios reported this morning.
In order to finance the project, Wright said, the administration is working to help the pipeline developer finalize commercial offtake and equity financing agreements, but the Energy Department’s loan office could also support the construction.
If you forgot, the 800-mile pipeline is intended to start in Prudhoe Bay, along the Arctic Ocean, where the existing Trans-Alaska Pipeline System, also around 800 miles long, begins. The project will also include the construction of a liquefaction facility to cool and condense the gas for exporting. Permitting for the project first started in 2014 and was finally completed in December.
Cold water on increased production: While the administration is using CERAWeek to encourage domestic oil and gas producers to ramp up their operations amid high prices, the largest fossil fuel trade group is doubtful that will happen.
“No one is going to be making significant investments in production when they don’t know what the duration of this is going to be,” Mike Sommers, president of the American Petroleum Institute, told Bloomberg . “Right now, we have a supply disruption, not a demand increase.”
EU AND AUSTRALIA STRIKE A TRADE DEAL: Australia and the European Union signed a free trade agreement, removing most tariffs and allowing the EU more access to Australian critical minerals.
The trade agreement, which came after almost eight years of talks, would eliminate more than 99% of tariffs on EU goods exports to Australia. About 98% of Australia’s goods exports will enter the EU duty-free.
The deal also facilitates EU access to Australian critical raw materials. Australia produces key materials, such as aluminum, manganese, copper, cobalt, tantalum, lithium, and nickel. Australia and the EU will also eliminate tariffs on environmental goods, including renewable energy and battery products.
RUNDOWN
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