At first glance, the proposition that Venezuela should go to war over a disputed territory, let alone with Guyana, seems rather dubious, but the risk of military aggression from Caracas cannot be completely ruled out
(Bloomberg) -- Hours after taking office, President Joe Biden made good on a campaign promise to cancel the Keystone XL oil pipeline. Later that day his Interior Department mandated that only top agency leaders could approve new drilling permits over the next two months.Next week, according to people familiar with the plans, Biden will go even further: suspending the sale of oil and gas leases on federal land, where the U.S. gets 10% of its supplies.The actions sent oil producers’ stocks tumbling and raised blood pressure across the industry.“In the first couple of days of the new administration, they are taking actions that will harm the economy and cost Americans their jobs,” said Frank Macchiarola, a senior vice president of policy for the American Petroleum Institute. “We’re concerned, and everyone in the country should be concerned.”The Interior Department’s order, signed late Wednesday, changes procedures for 60 days while the agency’s new leadership gets into place. It requires top brass to sign off on oil leases and permits as well as decisions about hiring, mining operations and environmental reviews.The industry took it as a bad omen. Officials are worried that technical permitting decisions are being placed in the hands of political appointees, rather than expert regulators in the field. And they’re concerned permits -- or simply changes to them -- will be delayed for existing drilling operations.Moreover, many interpreted it as a prelude to broader actions, including the administration’s plan to next week impose a moratorium on all oil, gas and coal leasing across some 700 million acres (2.8 million hectares) of federal land.This “announcement is intended as a temporary ban on leasing and permitting but is also a precursor to a longer-term ban,” said Kathleen Sgamma, head of the Western Energy Alliance, which has threatened to go to court to battle any such blockade.While Biden’s campaign promises - and his initial moves to fulfill them - are a threat to some U.S. oil producers, the actions could be a boon for crude prices by restraining supply.The administration’s early moves mark a dramatic shift from the course under former President Donald Trump, who sought to accelerate drilling permits and open up more places to oil exploration.And the change in direction is already apparent in early staffing decisions. Under Trump, the top offshore drilling regulator at Interior was Scott Angelle, a longtime oil industry ally and former Louisiana official who pushed for rapid permitting of Gulf of Mexico oil projects after the 2010 Deepwater Horizon disaster.By contrast, one of Biden’s first hires at the Bureau of Ocean Energy Management that oversees offshore oil leasing and wind farms is Marissa Knodel, a former activist with Friends of the Earth. Knodel was one of about 150 people whose rowdy protest of a bureau auction of oil drilling rights in March 2016 prompted the agency to shift subsequent oil and gas lease sales online.On the campaign trail, Biden called for phasing out fossil fuels and promised to halt new oil and gas permitting on federal land. Worried oil producers stockpiled leases and drilling permits last year in anticipation of more restrictions under Biden.But the suddenness of this week’s moves still took many in the industry by surprise, prompting frantic phone calls as lobbyists and lawyers sought to plan their next moves. They are strategizing their options, including litigation, and looking at any political levers they can pull to forestall a broader leasing ban.Senator Dan Sullivan, a Republican from Alaska, said permitting changes threaten operations in his state during the current winter season, when companies such as ConocoPhillips rely on ice roads and ice pads to support drilling and other activity in the National Petroleum Reserve-Alaska.“If you put a 60-day moratorium on drilling in the NPR-A, guess what? You lose the whole season,” Sullivan said Friday on the Senate floor.Environmentalists are delighted. They say throttling fossil fuel development on federal land is necessary to pare the greenhouse gas emissions driving climate change. The oil, gas and coal extracted from federal lands and waters is responsible for about 24% of U.S. carbon dioxide emissions, according to a U.S. Geological Survey report.“Pausing new fossil fuel decisions brings us closer to healthier communities, a healthier climate and healthier wild places,” said Dan Ritzman, director of Sierra Club’s Lands, Waters and Wildlife campaign. “Public lands can and must be part of the climate solution.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- After loading up with coal the DZ Weihai slipped into the turquoise waters off the coast of Australia this month and began a 14-day voyage to the southern Chinese port of Yangpu. How long the ship waits to discharge its cargo upon arrival is anyone’s guess.Despite a Chinese ban on coal imports from Australia that’s left about 70 ships, 1,400 seafarers and 6.4 million tons of the fuel in offshore limbo, some vessels continue to make the voyage. While the stranded cargoes and crew are trapped between authorities who won’t let them unload and buyers who won’t let them leave, perhaps most curious of all is what is driving additional shipments.While mundane matters like contractual commitments play a role, traders are likely motivated by a mixture of hope and money. China is considering accepting cargoes that arrived before the ban boosting optimism restrictions could ease. If they do, a windfall awaits as the gap between Chinese and Australian coal prices has widened to a record.“Chinese buyers with stranded cargoes are reluctant to resell these because the cost of these cargoes is so much less than domestic prices,” said Rory Simington, principal analyst at Wood Mackenzie Ltd. “Even if the cargoes are not released for another six months, the cost including demurrage would still be well below where the domestic prices are currently.”A single 100,000-ton cargo of coking coal from Australia would cost a trader about $14 million based on seaborne prices not including transport costs. The same amount bought in the domestic market would be roughly $28 million. The cost for failure to unload a bulk carrier, known as a demurrage fee, is between $13,000 and $17,000 daily.The Australian ban has never been publicly acknowledged by Beijing, making pinpointing its start date difficult. Chinese power stations and steel mills were verbally told to stop using the fuel in mid-October. Authorities also ordered traders to halt purchases of a raft of the country’s commodities, including coal, from Nov. 6.China’s customs administration didn’t immediately respond to a fax seeking comment.Since Oct. 15, 20 vessels have loaded coal in Australia and signaled destinations in China, including the DZ Weihai this month, according to shipping data compiled by Bloomberg. Some of them, like the Rixta Oldendorff, diverted to other countries mid-journey. But at least 11 have joined the larger flotilla and are waiting outside Chinese ports to discharge.To be sure, China’s ban on Australian coal has shifted global flows of the commodity dramatically: mainland buyers ordered several South African coal cargoes in December and have boosted imports from Indonesia and Russia. The value of China’s purchases of Australian coal fell by 16% last year to $7.9 billion.Still, China is considering accepting some Australian coal cargoes that arrived before the ban on the imports went into effect, a person familiar with the situation said this month. Deliberations are at an initial stage and any decision would need approval from senior leaders. The broader prohibition on Australian coal remains in place, and ideally the cargoes would be resold to buyers in other countries, the person said.“It’s interesting to see new coal deals that have been done recently, despite no clear signal that China’s ban on Australian imports will be canceled any time soon,” said Monica Zhu, a dry bulk analyst with Kpler. “These are individual trader activities and may not represent the mainstream market.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.