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INVESTORS BET ON PEACEFUL RESOLUTION IN GUYANA: Oil and natural gas major Hess Corporation was up more than 1% this morning – and almost 8% this week – on the news that Venezuela and Guyana agreed to rule out the use of force in their dispute over the Essequibo region.
Hess, which has operations in Guyana, and its stock have been seen as a proxy for the threat of conflict in the region. The possibility of an invasion from Venezuela has been seen as a danger to a deal with Chevron, which agreed to acquire Hess for $53 billion in October. The chance of a conflict has weighed on Hess’s stock price.
Now, though, investors are pricing in on a lower chance of war.
The events driving the news: Venezuela and Guyana agreed not to use force or threaten one another after their meeting over the oil-rich Essequibo territory yesterday, helping allay fears of conflict from neighboring countries and offshore developers in the region.
Venezuelan President Nicolas Maduro and Guyanese President Irfaan Ali released a joint statement after their sit-down stating their commitment to “good neighborliness” and “peaceful coexistence,” and agreed to create a joint commission to address any issues that might arise in the area, according to the text shared by Maduro on social media. They also agreed to meet again in Brazil in three months.
“It was a fruitful day, intense, at moments tense, where we could speak the truth,” Maduro said after the meeting, hosted by Saint Vincent and the Grenadines.
Still, some sticking points remain: The joint statement noted that the dispute will be resolved “in accordance with international law” — though Maduro’s government, of course, does not recognize the body with jurisdiction to rule on the dispute. (Their lack of consent was noted.)
Speaking to reporters in between sessions, Ali said the Essequibo “is not up for discussion, negotiation or deliberation,” and reiterated that Guyana is “not the aggressor.”
“Guyana is not seeking war, but Guyana reserves the right to work with all of our partners to ensure the defense of our country,” he said.
And the host country’s prime minister, Ralph Gonsalves, noted that defusing the immediate threat of invasion is the first step in a long mediation process.
“To use a cricket metaphor, this is not a one-day cricket match,” he said.
The Chevron-Hess deal is still expected to close in the first half of 2024.
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CORN GROWERS REACT TO BIDEN’S NEW SUSTAINABLE AVIATION FUEL GUIDANCE: The Biden administration said Friday it will allow ethanol-based fuels to be included in its Sustainable Aviation Fuel tax credit qualifications, delivering a victory to corn growers and Midwestern states.
Michael McAdams, the president of the Advanced Biofuels Association that has pushed for its inclusion, applauded the guidance, making note of the guidelines’ flexibility. “Recognizing that a one-size-fits-all approach is impractical, the Biden Administration’s acknowledgment of this reality is crucial for achieving significant carbon reductions in air travel,” McAdams said. “Our member companies have already made great investments and advancements in SAF production, and we hope that today’s announcement signals further government support for the technology.”
Gevo, an advanced renewable fuels company, also praised the administration’s decision to use the DOE Greenhouse Gases, Regulated Emissions, and Energy use in Technologies, or GREET formula, in its SAF guidance. “Designating GREET for the 40B credit sets an accurate, science-based precedent for transparent carbon accounting across the SAF supply chain, from farm fields to the end use of the fuel,” a written statement reads. “The details and certainty matter.”
The news: According to new Treasury Department tax credit guidance published today, fuels that reduce greenhouse gas emissions by at least 50% are eligible for the SAF credit under section 40B of the Inflation Reduction Act, allowing the ethanol-based fuel to qualify after months of uncertainty.
But the administration will also update the GREET methodology March 1, meaning that any victory could be short-lived.
The SAF guidance allows qualifying fuels to receive a credit of up to $1.25 per gallon. It comes after months of debate within the Biden administration over the issue, which had been divided over whether to use the GREET formula or a more stringent European model that would allow for the inclusion of fewer fuels.
The significance: The decision had been closely watched by Midwestern states and the U.S. corn lobby, which viewed the decision as one of the only ways to grow ethanol demand at a time when more drivers are opting to purchase electric vehicles, rather than gas-powered vehicles—in part due to the consumer tax credits included in the Inflation Reduction Act passed in 2022 by Democrats.
“Sustainable aviation fuel will provide low carbon fuel made here in America to help decarbonize the hardest to reach areas in the transportation sector,” Energy Secretary Jennifer Granholm said in a statement released along with the guidance from the Treasury. Read more from Breanne here.
SHIPPING FIRM PAUSES MOVEMENT THROUGH RED SEA, CITING REBEL ATTACKS: Maersk Tankers, one of the largest shipping companies in the world, is pausing all travel through the Red Sea, BBC News reports – a move that could disrupt the flow of oil and threaten global supply chains if other companies followed suit.
The decision comes after a series of attacks from Yemeni rebels controlled by the Houthis – a movement backed by Iran. The group has declared its support for Hamas and previously said it would be targeting ships traveling to Israel.
“The recent attacks on commercial vessels in the area are alarming and pose a significant threat to the safety and security of seafarers,” Maersk said in a statement sent to the BBC.
In the statement, the group cited a “near-miss incident” involving the company yesterday and another attack today as catalyzing its decision to pause travel through the Bab el Mandeb Strait.
Ships must pass through the strait to access the Suez Canal. Avoiding it would mean much longer routes around Africa. More on that here.
RUSSIAN OIL EXPORTS RISE TO FIVE-MONTH HIGH: Russian crude oil shipments have jumped to the highest point in five months, new data shows, replenishing the Kremlin’s war chest as its war in Ukraine drags on.
Russia shipped roughly 3.2 million barrels per day of crude oil in the last four-week period, according to vessel tracking data reviewed by Bloomberg.
The country’s oil exports from the last seven-day period saw an even larger spike, climbing to 3.76 million bpd, a 910,000 bpd increase from the previous week.
The rise in Russian oil exports comes even after OPEC+ ordered new voluntary supply cuts this month, as part of an effort to boost sagging oil prices after months of sustained decline.
Russia had already joined Saudi Arabia in enacting voluntary production cuts, however, and it is unclear whether it plans to slash its output any further.
INFRASTRUCTURE INVESTMENT EXPECTED TO PICK UP: Investment in infrastructure projects is expected to ramp up in 2024 after a few slow years, according to a report from the firm Prequin, as companies look to build out clean energy projects and manufacturing facilities in response to incentives from the Inflation Reduction Act and CHIPS and Science Act
While fundraising dropped sharply in 2023, the group projected a reversal to continue through the coming year, as companies like Tesla, Eli Lilly, Chevron, and BASF look to open new large plants with a heightened focus on reshoring their operations to the U.S.
The private capital group Brookfield closed a record $28 billion infrastructure fund investment—and its rivals are projecting similar ambitions, the Financial Times reports.
“Infrastructure is the asset class that is going to capture most of the fundraising for the energy transition,” Alex Murray, a researcher at Preqin, told the outlet.
The Rundown
E&E News Why the U.S. needs a grid that’s ‘bigger than the weather’
Bloomberg Chevron slashes California spending on ‘adversarial’ fossil-fuel policies
Washington Post VW spent $2B to build America a charging network. It’s ranked dead last.
