Energy
Venezuela oil czar in surprise resignation amid graft probes
A boy jumps near the “Los Petroleros” sculpture that shows two men working on an oil drill of Petroleos de Venezuela, S.A, PDVSA, on the Sabana Grande boulevard, in Caracas, Venezuela, March 20, 2023. Venezuela’s oil czar, Tareck El Aissami announced his resignation on Twitter and pledged to help investigate any allegations involving PDVSA. (AP Photo/Ariana Cubillos)
By Regina Garcia Cano in Caracas
CARACAS, Venezuela (AP) — The man responsible for running Venezuela’s oil industry — the one that pays for virtually everything in the troubled country, from subsidized food to ridiculously cheap gas — has quit amid investigations into alleged corruption among officials in various parts of the government.
Tareck El Aissami’s announcement Monday was shocking on multiple counts. He was seen as a loyal ruling party member and considered a key figure in the government’s efforts to evade punishing international economic sanctions.
And he led the state oil company PDVSA in a Venezuelan business sector widely considered to be corrupt — in a country where embezzelment, bribery, money laundering and other wrongdoing are a lifestyle.
“Obviously, they are giving it the patina of an anti-corruption probe,” said Ryan Berg, director of the Americas program at the Center for Strategic and International Studies, a Washington-based think tank.
“Rule of law is not being advanced here,” Berg added. “This is really a chance for the regime to sideline someone that it felt for some reason was a danger to it in the moment and to continue perpetuating acts of corruption once particular individuals have been forced out of the political scene.”
Hours after El Aissami revealed his resignation on Twitter, President Nicolás Maduro called his government’s fight against corruption “bitter” and “painful.” He said he accepted the resignation “to facilitate all the investigations that should result in the establishment of the truth, the punishment of the culprits, and justice in all these cases.”
Venezuela’s National Anti-Corruption Police last week announced an investigation into unidentified public officials in the oil industry, the justice system and some local governments. Attorney General Tarek William Saab in a radio interview Monday said that at least a half dozen officials, including people affiliated with PDVSA, had been arrested, and he expected more to be detained.
Among those arrested is Joselit Ramirez, a cryptocurrency regulator who was indicted in the U.S. along with El Aissami on money laundering charges in 2020.
Corruption has long been rampant in Venezuela, which sits atop the world’s largest petroleum reserves. But officials are rarely held accountable — a major irritant to citizens, the majority of whom live on $1.90 a day, the international benchmark of extreme poverty.
“I assure you, even more so at this moment, when the country calls not only for justice but also for the strengthening of the institutions, we will apply the full weight of the law against these individuals,” Saab said.
Oil is Venezuela’s most important industry. A windfall of hundreds of billions in oil dollars thanks to record-high global prices allowed the late President Hugo Chávez to launch numerous initiatives, including state-run food markets, new public housing, free health clinics and education programs.
But a subsequent drop in prices and government mismanagement, first under Chávez’s government and then Maduro’s, ended the lavish spending. And so began a complex crisis that has pushed millions into poverty and driven more than 7 million Venezuela to migrate.
PDVSA’s mismanagement, and more recently economic sanctions imposed by the U.S., caused a steady production decline, going from the 3.5 million barrels a day when Chávez rose to power in 1999 to roughly 700,000 barrels a day last year.
David Smilde, a Tulane University professor who has conducted extensive research on Venezuela, said the moves by Maduro’s government are more than just an effort to clean its image.
“Arresting important figures and accepting the resignation of one of the most powerful ministers in a case that involves $3 billion does not improve your image,” he said. “It is probably because the missing money actually has an important impact on a government with serious budgetary problems.”
The Biden administration recently loosened some sanctions, even allowing oil giant Chevron for the first time in more than three years to resume production. Maduro’s government has been negotiating with its U.S.-backed political opponents primarily to get the sanctions lifted.
U.S. congressional researchers saw El Aissami as an impediment to Maduro’s goals.
“Should Al Aissami remain in that position, it could complicate efforts to lift oil sanctions,” a November report from the Congressional Research Center said.
The U.S. government designated El Aissami, a powerful Maduro ally, as a narcotics kingpin in 2017 in connection with activities in his previous positions as interior minister and a state governor. The Treasury Department alleged that “he oversaw or partially owned narcotics shipments of over 1,000 kilograms from Venezuela on multiple occasions, including those with the final destinations of Mexico and the United States.”
Under the government of Chávez, El Aissami headed the Ministry of Internal Affairs. He was appointed minister of oil in April 2020.
“El Aissami was a key player in the Maduro government’s sanctions evasion strategy. We’re talking about someone who knows where all the bodies are buried, so it will be key to watch where he ends up,” said Geoff Ramsey, a senior fellow at the Atlantic Council focused on Colombia and Venezuela. “If El Aissami ends up being implicated himself, it could have serious implications for the entire power structure.”
In September, Maduro’s government renewed wrongdoing accusations against another former oil minister, Rafael Ramírez, alleging he was involved in a multibillion-dollar embezzlement operation during the early 2010s that took advantage of a dual currency exchange system. Ramírez, who oversaw the OPEC nation’s oil industry for a decade, denied the accusations.
In 2016, Venezuela’s then opposition-led National Assembly said $11 billion went missing at PDVSA in the 2004-2014 period when Ramirez was in charge of the company. In 2015, the U.S. Treasury Department accused a bank in Andorra of laundering some $2 billion stolen from PDVSA.
Minister of Natural Resources Jonathan Wilkinson arrives to a cabinet meeting on Parliament Hill in Ottawa on May 30, 2023. THE CANADIAN PRESS/Sean Kilpatrick
By Jeremy Simes in Regina
Federal natural resources minister Jonathan Wilkinson has asked Saskatchewan to work together on shared energy priorities after Ottawa and the province recently clashed over differing net-zero plans.
In a letter addressed to Premier Scott Moe this week, Wilkinson said he remains open to discussing how both parties can collaborate to build the economy while also ensuring the environment is sustainable for future generations.
Wilkinson has been working with each province to create regional energy and resource tables, forums that would identify areas where both jurisdictions can move forward on shared priorities and accelerate economic activity.
He said most provinces and territories have agreed to have their own table with Ottawa, but Saskatchewan has not.
Saskatchewan Justice Minister Bronwyn Eyre wrote to Wilkinson on May 16 the province won’t participate because it is “directly connected to the federal ‘Just Transition’ plan.”
Wilkson responded he’s disappointed Saskatchewan won’t take part, adding he believes people expect governments of all stripes to come together and find solutions.
“Given that the intention is to focus on areas of economic priority of the province for the advancement and betterment of the provincial economy, it is difficult to understand such a rejection and how this will be in the best interest of Saskatchewan’s citizens,” he said in the letter Wednesday.
Alberta, Nunavut and Quebec have not yet said if they will participate.
Wilkinson’s letter comes after Moe said Saskatchewan would not meet Ottawa’s target for electricity emissions to be net-zero by 2035.
Moe has said Saskatchewan can meet a 2050 target, but the 2035 target is not achievable, would harm the province’s economy and cause electricity to be unaffordable and unreliable.
The 2035 target is part of Ottawa clean electricity standards, which are still under development. The standards would allow fossil fuels to be used if the emissions are abated.
Wilkinson said the 2035 target is possible, affordable and desirable.
He said countries and businesses are moving toward net-zero to seize economic opportunities and to avoid the effects of climate change, noting all G7 countries have committed to achieving a decarbonized electricity grid by 2035.
In her letter, Eyre indicated the province is still open to having discussions with Ottawa about projects and funding.
However, she said Saskatchewan is “drawing a line” over various environmental policies she believes are harmful.
She said Ottawa should stop these policies, which include proposed emissions caps, the carbon tax, clean electricity regulations, fuel standards and fertilizer emissions reductions.
“When you do this, we can build a stronger Canada together,” she said in the letter.
Wilkinson said Ottawa and Saskatchewan already agree in several areas, including hydrogen, biofuels, critical minerals, value-added agriculture, carbon capture and small modular nuclear reactors.
He said the province could start dialogue over advancing key projects, including Foran Mining’s plans in northeast Saskatchewan and the Critical Minerals Processing Centre in Saskatoon.
Wilkinson said both parties could also look at how they can advance regulatory processes around small modular nuclear reactors, which Saskatchewan is considering as part of its future electricity grid.
This report by The Canadian Press was first published June 8, 2023.
Canadian Energy Centre
Mexico leapfrogging Canada on LNG and six other global oil and gas megaprojects
By Deborah Jaremko of the Canadian Energy Centre Ltd.
Major investments in countries like the United States, Norway, Qatar and Saudi Arabia are being made to meet world demand
New major oil and gas megaprojects around the world are proceeding amid concern about underinvestment in conventional energy leading to painful supply shortages.
“The energy future must be secure and affordable, as well as sustainable,” said Daniel Yergin, vice-chairman of S&P Global, earlier this year.
“Adequate investment that avoids shortages and price spikes, and the economic hardship and social turbulence that they bring, is essential to that future.”
Even if oil and gas demand growth slows, a cumulative $4.9 trillion will be needed between 2023 and 2030 to prevent a supply shortfall, according to a report by the International Energy Forum and S&P Global Commodity Insights.
Major investments in countries like the United States, Norway, Qatar, Saudi Arabia and Mexico are being made to meet world demand.
Meanwhile, due to regulatory uncertainty and concerns over proposed policies like an emissions cap for oil and gas production, Canada’s vast resources – produced with among the world’s highest standards for environmental protection and social progress – are being left behind.
Here’s a look at just a handful of global oil and gas megaprojects, listed in rising order of development cost.
Mexico: Altamira LNG
US$1 billion
New Fortress Energy
Mexico is leapfrogging over Canada to become an LNG exporter.
While Canada’s first LNG export project is expected to start operating in 2025, Mexico’s could come online this August – less than 10 months after Mexico’s government finalized a deal with U.S.-based New Fortress Energy to make it happen.
While relatively small at 1.4 million tonnes of LNG per year (LNG Canada’s first phase will have capacity of 14 million tonnes per year), under Mexico’s agreement the Altamira site is to become an LNG hub.
New Fortress Energy is to deploy multiple same-sized floating LNG units to produce LNG from natural gas transported through TC Energy’s Sur de Texas-Tuxpan pipeline.
An existing LNG import terminal at Altamira is also expected to be converted into a 2.8-million-tonne-per-year export facility.
United States: Willow Oil Project
US$8 billion
ConocoPhillips
The U.S. government granted approval this March for the giant Willow oil project on Alaska’s North Slope to proceed.
The project, owned by ConocoPhillips, is designed to produce 180,000 barrels per day at peak and operate for 30 years. It includes a processing facility, operations centre, and three drilling sites.
The Willow leases are inside the National Petroleum Reserve – Alaska, which was established in 1923 as an emergency oil supply for the U.S. Navy. It is now administered by the U.S. Bureau of Land Management.
Willow would occupy about 385 acres (around half the area of Central Park in New York City) in the northeast portion of the 23-million-acre reserve. It is expected to deliver nearly US$9 billion in government revenue, creating about 2,500 jobs during construction and 300 long-term positions.
ConocoPhillips has yet to make a final investment decision, but is anticipating starting production in 2029, according to the Anchorage Daily News.
United States: Golden Pass LNG
US$10 billion
QatarEnergy, Exxon Mobil
Golden Pass LNG is one of four natural gas export terminals under construction on the U.S. Gulf Coast as the United States continues to build its platform as an LNG powerhouse.
With about 90 million tonnes per year of LNG export capacity today, analysts with Wood Mackenzie expect that if current momentum continues, another 190 million tonnes per year could come online by the end of this decade.
The US$10-billion Golden Pass project owned by QatarEnergy and Exxon Mobil will have three production trains with total export capacity of about 18 million tonnes of LNG per year.
The U.S. began exporting LNG in 2016 and has since built more LNG capacity than anywhere else in the world, according to the U.S. Energy Information Administration.
First LNG exports from Golden Pass are planned for 2024.
Norway: Njord Field Restart
US$29 billion
Wintershall Dea, Equinor, Neptune Energy
Norway has officially reopened a major offshore oil and gas field, with the goal to extend its life beyond 2040 and double its total production.
Nearly US$30 billion in upgrades to the Njord project’s production platform and offloading vessel started in 2016, after nearly 20 years of operations. It was originally only expected to run until 2013, but improvements in recovery technology have opened the door to accessing substantially more resources.
Production restarted in December 2022, just in time to help address Europe’s energy crisis.
“With the war in Ukraine, the export of Norwegian oil and gas to Europe has never been more important than now. Reopening Njord contributes to Norway remaining a stable supplier of gas to Europe for many years to come,” Norway’s oil and energy minister Terje Aasland said in a statement.
The project will drill 10 new wells and tie in two new subsea oil and gas fields, with the work expected to add approximately 250 million barrels of oil equivalent to the European market. Partial electrification of equipment is expected to reduce greenhouse gas emissions.
Qatar: North Field East LNG expansion
Qatar Energy, Shell, TotalEnergies, Eni, Exxon Mobil, ConocoPhillips, Sinopec
US$29 billion
The largest LNG project ever built is underway in Qatar.
State-owned QatarEnergy’s US$29 billion North Field East Expansion will increase the country’s LNG export capacity to 110 million tonnes per year, from 77 million tonnes per year today. Startup is planned in 2025.
A planned second phase of the project will further increase capacity to 126 million tonnes per year.
World LNG demand reached a record 409 million tonnes in 2022, according to data provider Revintiv. It’s expected to rise to over 700 million tonnes by 2040, according to Shell’s most recent industry outlook.
Saudi Arabia: Jafurah Gas Project
US$110 billion
Saudi Aramco
State-owned Saudi Aramco is moving ahead with development of the massive Jafurah gas project, which it says will help meet growing energy demand and provide feedstock for hydrogen production.
First gas from the $110-billion project is expected in 2025, rising to reach two billion cubic feet per day by 2030. That’s about one-third the volume of all the natural gas produced in British Columbia. Saudi Aramco produced 10.6 billion cubic feet of natural gas per day in 2022, or more than half the gas produced in Canada.
Last year the company started construction work on the gas processing facility that is the anchor of the Jafurah project. Aramco is reportedly in talkswith potential partners to back the US$110 billion development.
Russia: Vostok Oil
US$170 billion
Rosneft
Russian state-owned oil company Rosneft continues to barrel ahead with the massive Vostok oil project in the country’s arctic, which Rosneft calls the largest investment in the world.
The US$170 billion project will use the Northern Sea Route to export about 600,000 barrels per day by 2024. Production is expected to increase to two million barrels per day after the second phase. For comparison, Canada’s entire oil sands industry produces about three million barrels per day.
The main problem the energy industry faces is global underinvestment in conventional sources, Rosneft CEO Igor Sechin said earlier this year. He stressed the importance of Vostok’s oil supply for growing Asian economies.
“Vostok Oil project will provide long-term, reliable, and guaranteed energy supplies,” Sechin said.
Two new icebreaker vessels recently helped deliver 4,600 tonnes of cargo including oil pipes for the project to the arctic development sites, the Barents Observer reported.
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