Brazil government pushes Congress to approve 'green' bills before COP28

Brazil's government expects Congress to approve a series of energy transition-related bills in the next 100 days that it believes will boost the country's decarbonization credentials at the upcoming COP28 climate summit, said Reuters.

Rodrigo Rollemberg, a secretary at Brazil's development ministry, said in an interview that the package of bills are set to include projects aimed at increasing the use of renewable fuels and regulating related sectors, such as offshore wind farms.

That would allow the South American country to strengthen its "green" commitment as nations from all over the world prepare to gather in November and December in Dubai for yearly climate talks held by the United Nations. President Luiz Inacio Lula da Silva, who took office in January, has staked his international reputation on reversing environmental backsliding under his far-right predecessor Jair Bolsonaro, when Amazon deforestation soared.

Lula has pledged to halt illegal deforestation in the Amazon rainforest by 2030 and help drive an ecological transition led by renewable energy.

Rollemberg said the government-sponsored bills would be focused on four main topics: establishing a new carbon market, regulating offshore wind power, launching the “Fuel of the Future" project and regulating green hydrogen. "They are all separate bills, but when put together there is a convergence towards sustainability that gives them economic support they otherwise would not have," Rollemberg said.

The "Fuel of the Future" project, the secretary noted, would look to stimulate production of sustainable aviation fuel (SAF) in Brazil, which Boeing recently touted as a potential top player in the sector. The government expects to encourage the use of degraded farmland to drive SAF output. Other proposals include raising the required ethanol blending into gasoline to 30% from the current 27%, Rollemberg said.

One of the most advanced proposals, he added, is the one that would create a regulated carbon market in the country. That bill might be submitted to Congress as early as next week, the secretary said. "We have 100 days until COP28. It's more than enough time for Congress to pass all the bills," Rollemberg said.

"Brazil has a unique opportunity in the second half to finish the year giving out very strong signals to domestic and international markets that it is the country that really intends to lead the transition to a green and low-carbon economy." The South American nation is set to host the U.N. climate talks in 2025 in the Amazonian town of Belem.

We remind, Marathon Petroleum’s former refinery in Martinez, California, has been repurposed to produce renewable diesel through the company’s joint venture with Neste. The Martinez Renewable Fuels Facility is currently operating with a capacity of 260 MMgal/yr. Additional production capacity is expected to be online by the end of 2023, bringing the total capacity to approximately 730 MMgal/yr of renewable fuels.

mrchub.com

U.S. motorists hoping to squeeze out one last trip before the Labor Day holiday and school begins are finding pump prices that have surged to their highest level this year on tighter gasoline supplies, said Reuters.

Consumers tend to get a break from steeper fuel costs as peak vacation travel ebbs. But strong demand and a series of refinery outages have pushed the national average retail price to USD3.86 per gallon on Tuesday, according to the American Automobile Association - 7% higher than a month ago. In California and Washington, prices have surged above USD5 a gallon.

National retail gasoline prices will average USD3.90 a gallon this month, predict analysts at Goldman Sachs. Martin Jones, a vacationer from Massachusetts, filled up his Toyota Corolla during a sightseeing trip to Washington, D.C., on Tuesday. Jones said he was relieved prices were not close to the USD5 a gallon level of last summer.

"Or I won't be able to make long drives like this as easily," Jones said. Retail prices in the U.S. Midwest jumped as much as 21 cents a gallon in Ohio and 16 cents in Michigan in the last week on earlier-than-expected maintenance at a BP refinery in Whiting, Indiana.

Irving Oil's 320,000-barrel-per-day oil refinery in New Brunswick, Canada, and Delta's 185,000-barrel-per-day refinery in Trainer, Pennsylvania, will be down for much of September and part of October, affecting about 9% of the product supplied in their regions.

We remind, peak hurricane season is still ahead with the U.S. National Oceanic and Atmospheric Administration (NOAA) last week raising its outlook for storms due in part to record warm sea surface temperatures. Hurricanes can result in damage to or closures of U.S. oil refineries, particularly along the Gulf Coast.

mrchub.com

Unigel, the largest Brazilian manufacturer of nitrogen fertilizers, on Thursday announced the resumption of activities at a unit called Unigel Agro Sergipe, which produces urea and ammonia, said Reuters.

The company said it scheduled the restart for September after a slight improvement in the outlook for the domestic petrochemical sector. The factory in Sergipe state was idled due to challenging market conditions, Unigel said. Another plant in Bahia state that was likewise idled will remain offline.

Both are leased from state-run oil giant Petrobras . "The chemical industry's outlook remains challenging, but we understand that it is time to resume activities gradually and responsibly," Unigel's CEO Roberto Santos said in a statement.

"We foresee an increase in urea demand through the end of the year due to the next winter harvest," he said. When operating at full capacity, the Sergipe plant can produce 450,000 tons of ammonia and 650,000 tons of urea per year.

Unigel's decision is good news for the farm sector as it will reduce some of Brazil's heavy reliance on imported fertilizers. Santos said imports currently provide 85% of demand. Information about restarting the Sergipe plant was first disclosed by Brazil's Valor Economico newspaper.

We remind, Thyssenkrupp nucera and Unigel have signed a Memorandum of Understanding (MoU) to increase the capacity of the green hydrogen plant that Unigel is developing in Bahia, Brazil, from 60 MW to 240 MW of water electrolysis.

mrchub.com

Spot discounts for Russian crude for September loading have started to deepen as India, a key customer of Moscow, reduces purchases due to high prices and maintenance outages at some refineries, four traders and Indian refinery officials said, said Hydrocarbonprocessing.

India is the top buyer for Russian Urals crude this year and slowing demand from the world's third-largest importer could push more supply to China instead. Spot discounts for September loading of Russia's flagship grade Urals for delivery at Indian ports have widened to about USD6 per barrel from an average USD5 for August, the trade sources said.

However, Indian refiners are waiting for discounts to widen to at least USD7 per barrel, sources at three state refiners said. "We have not placed a request for September cargoes as the discount is not attractive ... it is still below USD7 per barrel," a refinery official said. Two traders said discounts are unlikely to widen further.

Prices for Russian oil jumped for August barrels following Moscow's pledge to cut exports as a part of the OPEC+ deal, cooling demand from Indian buyers. India's top refiner and a key buyer of Russian oil, Indian Oil Corp (IOC), is staying away from the spot markets for Russian oil and is meeting most of its demand through supplies in its term contract, a separate source said.

The traders and the refinery sources declined to be named as they are not authorized to speak to media. IOC did not immediately respond to a request for comment. At least two Indian refiners, Mangalore Refinery and Petrochemical Ltd and Reliance Industries, have scheduled maintenance on plants during September, which would cut their crude purchases.

MRPL Managing Director Sanjay Varma told Reuters that his company would cut purchases this month and next due to a maintenance outage for about 40 days at a 60,000 barrels per day crude unit. Reliance is shutting half of its export-focused 704,000 bpd plant for maintenance.

In China, some big private refiners, which earlier in the year bought Urals supplies, are looking at buying September-loading cargoes via state traders as intermediaries, said a trader familiar with the situation. "These big private refiners buy mostly non-sanctioned oil, but still, Urals are about $6-$8 dollar cheaper (for delivery at Chinese ports)," the trader said.

Despite widening discounts, the calculated Urals oil price remains above the USD60 per barrel price cap applied by the Group of Seven countries (G7) and the West. As of Thursday, calculated Urals oil price on FOB basis in Baltic ports was close to $66 per barrel given the cost of freight and additional costs of USD2 per barrel.

We remind, China, the world's top crude importer, is drawing on record inventories amassed earlier this year as refiners scale back purchases after OPEC+ supply cuts drove global prices above $80 a barrel, traders and analysts said. Chinese refiners, led by Sinopec and PetroChina, have built a supply buffer using massive storage capacity constructed over the past decade that gave buyers flexibility to boost purchases when prices are low and cut back when oil becomes expensive.

mrchub.com

Asian refiners are on the hunt for crude oil to replace Kuwaiti supply as the OPEC producer cuts exports by nearly a fifth to feed its huge new refinery, which is driving up prices for other sour crudes and likely to squeeze profit margins, said Hydrocarbonprocessing.

Lower Kuwaiti exports follow cuts from OPEC kingpin Saudi Arabia that have pushed Brent prices close to USD90 a barrel and left little wriggle room for Asia's refiners, reliant on the Middle East for more than two-thirds of crude imports.

Chinese refiners, which have invested heavily in new plants designed to process sour oil, are especially exposed. Discounted oil from Russia has eased some of the pain, replacing some Kuwaiti supply, largely to China and India.

But most of Kuwait's customers will have to pay up for similar quality oil from other suppliers such as Saudi Arabia, Iraq and the United Arab Emirates or buy more expensive sweet grades from other regions. "Saudi Arabia and the UAE are the top contenders for filling the supply gap in the Middle East due to their production and export of medium sour barrels," said Janiv Shah, an analyst at consultancy Rystad Energy.

"It is improbable that they will be able to entirely meet the demand." Sustained output cuts from OPEC producers and their allies and new refining capacity designed to process sour crude could lead to tight supply until the end of 2024, Energy Aspects analyst Sun Jianan said.

Kuwait's crude shipments shrank by about 10% to 1.61 million barrels per day (bpd) in January-July from the same period in 2022 as its Al Zour refinery ramped up, according to Kpler data. Exports to Taiwan, China and India dropped more than 17% during the same period, while volumes for Pakistan, the Philippines and Thailand fell to zero, the data showed.

In the second half, Kuwait will reduce its exports by up to 300,000 bpd, down 18% from the first half, as it diverts supply to the 615,000 bpd Al Zour plant, which cranked up its third and final crude distillation unit (CDU) in July, according to consultancies FGE, Energy Aspects, Rystad Energy and S&P Global Commodity Insights.

Additionally, Kuwait's joint venture 230,000 bpd Duqm refinery in Oman is scheduled to start operation by end-2023, which could reduce Kuwaiti crude exports by a further 100,000 bpd to 200,000 bpd in 2024, the consultancies said.

Kuwait Petroleum Corp (KPC) has notified buyers that volumes could fluctuate each month and could be further reduced once Al Zour is at full operation, a source familiar with the matter said. KPC did not respond to Reuters' inquiry seeking comment.

We remind, U.S. motorists hoping to squeeze out one last trip before the Labor Day holiday and school begins are finding pump prices that have surged to their highest level this year on tighter gasoline supplies. Consumers tend to get a break from steeper fuel costs as peak vacation travel ebbs.


mrchub.com