US Treasury imposes sanctions on Iranian shadow banking network laundering oil money
Tomorrow's News Today - The ENB Daily Stand Up Stories for June 27th
Michael and Stu have way too much fun today recording today’s show. We have to question whether Carbon Capture is a scam or just part of the wealth transfer. - What do you think?
1: Shell to build carbon capture and storage projects in Canada
Shell Canada Products, a subsidiary of Shell plc, announced the Final Investment Decision (FID) for Polaris, a carbon capture project at the Shell Energy and Chemicals Park, Scotford in Alberta, Canada.
Polaris is designed to capture approximately 650,000 tonnes of CO2 annually from the Shell-owned Scotford refinery and chemicals complex.
In addition to the Polaris FID, Shell announced FID to proceed with the Atlas Carbon Storage Hub in partnership with ATCO EnPower. The first phase of Atlas will provide permanent underground storage for CO2 captured by the Polaris project.
“Carbon capture and storage is a key technology to achieve the Paris Agreement climate goals,” said Huibert Vigeveno, Shell’s Downstream, Renewable and Energy Solutions Director. “The Polaris and Atlas projects are important steps in reducing emissions from our own operations.”
Polaris and Atlas will build on the success of the Quest carbon capture and storage (CCS) facility at Scotford, which has safely captured and stored more than nine million tonnes of CO2 since 2015 that would otherwise have been released into the atmosphere.
Both projects are expected to begin operations toward the end of 2028.
There is only one reason to be involved in Carbon Capture—and that is for the tax and government handouts. Look at Warren Buffett and his investments in Occidental. I think that they are doing great things for the share holders and their returns. Eliminating the handouts would make carbon capture a waste of time. Man cannot capture enough carbon to make a difference. Between one volcano and China, there is nothing the US can do other than go broke.
2: US Treasury imposes sanctions on Iranian shadow banking network laundering oil money
Since Biden took office, the Biden administration has not enforced sanctions against Iran, and Iran has enriched more uranium and increased production to over 4 million barrels per day from under 2 million barrels per day during the former presidency. This article brings up two questions: why now and " what difference will it make?”
Shadow Banking is now the new “Ghoast or Dark Fleet”.
The US Treasury Department on June 25 imposed sanctions on parts of a shadow banking network that Iran uses to launder billions in oil proceeds used to provide weapons to Russia and regional proxy groups like the Houthi rebels in Yemen.
“We have sanctioned hundreds of targets involved in Iran’s illicit oil and petrochemical-related activity since President Biden took office, and we will continue to pursue those who seek to finance Iran’s destabilizing terrorist activities,” Wally Adeyemo, deputy secretary of the Treasury, said in a statement.
The new sanctions come after Iran in May announced that it plans to raise its crude oil production capacity by 400,000 b/d.
The latest Platts OPEC+ survey by S&P Global Commodity Insights has Iranian crude production at 3.17 million b/d for May, up from 2.66 million b/d a year ago.
Tehran achieved a 3.8 million b/d crude output before former US President Donald Trump’s 2018 “maximum pressure” sanctions campaign, which pushed output as low as 2 million b/d.
Sanctions impact
The sanctions are designed to impair Iran’s support for regional partners and increase the costs of illicit transactions, but they are not a real escalation, said Rachel Ziemba, a senior advisor at Horizon Engage.
“Overall, I think this is calibrated for the US domestic audience to seem like they are doing something meaningful,” Ziemba said. The sanctions will not have a big impact on the global oil markets because the volumes affected are low and because OPEC members would be delighted to pump more oil, she said.
If the administration really wanted to stop Iranian oil flows, it could designate Chinese, Emirati and Malaysian entities involved in the illicit trade, Ziemba said. But the US is unlikely to be willing to do this ahead of the elections in Iran and US, she said.
Brenda Shaffer, an energy expert at the US Naval Postgraduate School argued that the Biden administration’s lax enforcement means the new US sanctions will have little effect on Iran’s ability to export oil, fund its proxies and advance its weapons production.
“Adding to the weakness of sanctions is the growing cooperation between Iran, Russia and China,” Shaffer said. “These countries do not need Western banks and financial systems to move money between them and to the proxies.”
Shadow banking
Shadow banking networks give sanctioned Iranian entities access to the international financial system and obfuscate their trade with foreign customers, Treasury’s Office of Foreign Assets Control said in the statement.
Iran does this by using exchange houses in Iran that manage cover companies registered in places like Hong Kong or the United Arab Emirates to launder the revenue from activities like oil sales, Treasury said. The same cover companies then use the laundered foreign currency to buy weapons components on the international market, Treasury explained.
Treasury sanctioned a number of key individuals in the network, including Seyyed Mohammad Mosanna’i Najibi, an Iranian Turkish moneychanger. Najibi works to set up cover companies and accounts for Iran, hold money in accounts outside of Iran, transport hard currency across borders, retrieve revenue from Iranian oil sales and transfer funds to weapons suppliers, Treasury explained.
Treasury also designated 27 cover companies based in Hong Kong, UAE and the Marshall Islands that are controlled by Najibi and used to obfuscate international financial activity.
Other sanctioned individuals include Ramin Jalalian, an Iranian currency exchanger, Siavash Nourian, the owner of an Iranian exchange house, and Seyyed Reza Mir Mohammad Ali, another owner of an Iran exchange company. Treasury also designated companies in the UAE and Hong Kong owned by these sanctioned individuals as well as companies owned by Asadollah Seifi, who was sanctioned in 2019.
3: Dutch and French terminals remain top destinations for US LNG supplies
The US needs to unleash our LNG exports to save the global pollution issue. Sounds counter-intuitive. But every LNG tanker represents a coal plant that may not be used. Also check out our trading desk if you are buying or selling. Crude Oil, midstream, LNG, Jet Fuel price quote
Dutch and French LNG import terminals remained the top destinations for US liquefied natural gas supplies in April, as European terminals continue to receive the majority of US LNG volumes, according to the Department of Energy’s newest LNG monthly report.
The DOE report shows that US terminals shipped 47.5 Bcf of LNG to the Netherlands in April, 37.7 Bcf to France, 22.2 Bcf to Japan, 21.5 Bcf to Germany, and 20.8 Bcf to India.
France and the Netherlands were also the top destinations for US LNG cargoes in March.
According to DOE’s data, the Netherlands was the top destination for US LNG supplies in January-April with 192 Bcf or 57 cargoes, down by 3 percent year-on-year, while France took 175.7 Bcf or 53 cargoes, up by 13 percent year-on-year.
In 2023, the Netherlands was also the the prime destination for US LNG cargoes with 588.6 Bcf, followed by France with 493.2 Bcf.
The US exported in total 303.8 Bcf of LNG in April to 27 countries, down by 19.2 percent compared to the same month in 2023 and a drop of 17.9 percent from the prior month, the DOE report shows.
Europe received 157.3 Bcf or 51.8 percent of these volumes. The percentage of US monthly LNG supplies to Europe shrank in April from about 60 percent in the prior month and from 71.6 percent in January this year as more volumes head to Asia and Latin America/Caribbean.
Asia received 113.8 Bcf or 37.5 percent of US LNG volumes in April, and Latin America/Caribbean received 32.7 Bcf or 10.8 percent.
The DOE said that 84.4 percent of total April LNG exports went to non-free trade agreement countries, while the remaining 15.6 percent went to free trade agreement countries.
US terminals shipped 105 LNG cargoes in April, down from 119 LNG cargoes in March.
Cheniere’s Sabine Pass plant sent 35 cargoes and its Corpus Christi terminal shipped 18 cargoes, while Sempra’s Cameron LNG plant sent 22 shipments and Venture Global’s Calcasieu plant sent 11 cargoes.
The Freeport LNG terminal sent only 6 cargoes in April as it was operating with only one train, while Elba Island LNG sent 5 cargoes, and Cove Point LNG dispatched 8 shipments.
According to DOE’s report, the average price by export terminal reached 5.25/MMBtu in April, and this compares to $6.58 in April 2023, while the average price was $5.47/MMBtu in March, $6.31/MMBtu in February, and 6.63/MMBtu in January this year.
The most expensive average price in April comes from Venture Global’s Calcasieu Pass terminal and it reached $7.82/MMBtu.
Prices at other facilities ranged between $4.03-$5.93/MMBtu, the data shows.
The report said that in the period from February 2016 through April 2024, the US exported 6109 cargoes or 19,365.1 Bcf to 41 countries.
The DOE data shows that South Korea remains the top destination for US LNG with 601 cargoes, and the country is followed by Japan with 485 cargoes, France with 508 cargoes, the UK with 463 cargoes, and the Netherlands with 446 cargoes.
France took more cargoes than Japan but less volumes.
Besides these five countries, Spain, China, India, Turkiye, and Brazil are in the top ten as well.
These five countries took 49.3 percent of total US LNG exports in April.
4: Saudi Aramco Set to Buy 25% in U.S. LNG Project
There is a huge reason international energy companies are investing in US energy. It’s about returns.
Saudi Arabia’s oil giant Aramco has signed a non-binding agreement to buy LNG from Sempra’s Port Arthur LNG project and potentially acquire 25% in the project’s Phase 2, the U.S. and Saudi firms said on Wednesday.
Under the non-binding Heads of Agreement (HoA), Aramco and Sempra are set to discuss a 20-year sale and purchase agreement for LNG offtake of 5.0 million tonnes per annum (Mtpa) from the Port Arthur LNG Phase 2 expansion project. Today’s agreement further contemplates Aramco’s 25% participation in the project-level equity of Phase 2.
Phase 1 of the Port Arthur LNG project, an export terminal in Southeast Texas with direct access to the Gulf of Mexico, is currently under construction and consists of trains 1 and 2, as well as two LNG storage tanks and associated facilities. The Port Arthur LNG Phase 2 project is a planned expansion of the site to include the addition of up to two trains capable of producing up to 13 Mtpa.
“This agreement is a major step in Aramco’s strategy to become a leading global LNG player,” said Nasir K. Al-Naimi, Aramco Upstream President.
This is the second heads of agreement Saudi Aramco has signed with a U.S. LNG developer in the past two weeks.
Earlier this month, Aramco and NextDecade Corporation announced a heads of agreement for a 20-year LNG offtake deal from train 4 at the Rio Grande LNG export facility in Texas.
Aramco, the world’s top crude exporter and the world’s biggest oil firm, has been seeking a greater role on the global LNG market as it plans to ramp up its natural gas production and trading business.
Last autumn, Saudi Aramco entered the global LNG business by signing a deal to buy a minority stake in LNG company MidOcean Energy, which was in the process of acquiring interests in four Australian LNG projects.
Going into LNG trading would be another lucrative business for the Saudi oil giant, considering that LNG demand is only set to grow in the coming years as Europe ditches Russian gas and Asia looks to use more natural gas instead of coal.
Michael covers the latest inventory numbers and current oil and gas prices.
Buckle up, and enjoy the debate tomorrow. We want to know which Biden shows up. The one on massive amounts of Red Bull, or the body double as we joked about.
5: Quantum Capital to acquire Caerus Oil and Gas in $1.8bn deal
US-based private equity company Quantum Capital Group has reached an agreement to purchase Caerus Oil and Gas, valuing the Rocky Mountain energy company at $1.8bn, reported Bloomberg, citing sources.
The deal involves Quantum Capital buying Caerus from its current investors, which include Oaktree Capital Management, Anschutz Investment Company, and Old Ironsides Energy.
Quantum’s representative declined to comment on the news, the news agency said, adding that requests for comment from Caerus, Oaktree, Anschutz and Old Ironsides also did not elicit a response.
This deal underscores the growing involvement of buyout companies in the oil and gas industry, which has witnessed a boom in transactions following the pandemic’s impact on the energy market.
Last month, Crescent Energy, supported by KKR & Co., agreed to a $2.1bn deal for SilverBow Resources.
The transaction between Quantum and Caerus is also notable as a secondary buyout, a less common occurrence in the US oil and gas sector, where corporate entities are usually the ones acquiring assets from private equity-backed companies.
Earlier in the month, Matador Resources Company announced the purchase of assets in the Permian Basin from an EnCap Investments portfolio company for $1.9bn in cash.
Caerus currently operates more than 7,400 wells across the Piceance Basin in Colorado and Uinta Basin in Utah.
The company also has related infrastructure including more than 3,862km of gas and water pipelines, as well as numerous water treatment and storage facilities.
Like the EU’s indecisions about ESG, emissions trading, and energy regulation, the US Government doesn’t seem to realize that uncertainties such as the LNG pause panics and freezes the global financial markets and international trade.
When are world’s nations or the UN going to understand that heavy-handed energy regulations are far worse than no governmental involvement at all?
BTW, nice recaps of the energy news, Stu.