TotalEnergies decides to withdraw its directors from Novatek

Further to its principles of conduct defined for its activities in relation to Russia, published on March 22, 2022, TotalEnergies has gradually started to withdraw from its Russian assets while ensuring that it continues to supply gas to Europe, said the company.

TotalEnergies holds a 19.4% stake in the company Novatek, a stake that it cannot sell given the prevailing shareholders’ agreements, as it is forbidden for TotalEnergies to sell any asset to one of Novatek's main shareholders who is under sanction.

In view of the European sanctions in force since the beginning of the war, the two directors representing TotalEnergies on the board of directors of Novatek are led to abstain from voting in meetings of the board of directors of this company, in particular on financial matters. They are therefore no longer in a position to fully carry out their duties on the board which might become an issue for the governance of this company.

Under these circumstances, the Board of Directors of TotalEnergies has decided to withdraw the representatives of the Company from the board of PAO Novatek with immediate effect. As a result, the criteria for significant influence no longer being met within the meaning of the accounting regulations that apply to the Company, TotalEnergies will no longer equity account for its 19.4% stake in Novatek in the Company's accounts.

This will lead to record an impairment of approximately USD3.7 billion in the accounts for the 4th quarter of 2022. In addition, TotalEnergies will no longer book reserves for its interest in Novatek, with an impact on the Company's reported proved reserves at the end of 2021 of 1.7 billion of barrels. However, the life duration of the Company's proved reserves will remain above 11 years of production.

We remind, TotalEnergies and Air France-KLM have today signed a Memorandum of Understanding (MoU) for the delivery of more than 1 MMcm3/800,000 tons of SAF by TotalEnergies to Air France-KLM Group airlines over the 10-year period from 2023. This sustainable aviation fuel will be produced by TotalEnergies at its biorefineries. It will be made available to Air France-KLM Group’s airlines, mainly for flights departing from France (in accordance with French legislation) and the Netherlands.
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MRC) -- An outage on the largest oil pipeline to the U.S. from Canada could affect inventories at a key U.S. storage hub and cut crude supplies to two oil refining centers, analysts and traders said, said Hydrocarbonprocessing.

TC Energy's Keystone pipeline ferries about 600,000-bpd of Canadian crude to the U.S. It was shut late Wednesday after a breach spewed more than 14,000 bbl of oil into a Kansas creek, making it the largest crude spill in the U.S. in nearly a decade.

While TC Energy has yet to say when it could restart the pipeline, a previous Keystone spill affected operations for two weeks. "The main question continues to be the duration of the potential outage...the longer the duration, ultimately, of course means potentially tighter inventories in Cushing or heavy (crude) on the Gulf Coast," said Michael Tran, a Managing Director at RBC Capital markets.

The line runs directly to the Cushing, Oklahoma storage hub, which is currently about a third full with nearly 24 MMbbl in stock. If the line is closed for more than a week, it could reduce Cushing stocks by about 2.5 MMbbl, data analytics firm Wood Mackenzie said.

If the outage last for more than 10 d, it could push Cushing storage to near the operational minimum of 20 MMbbl, said AJ O'Donnell, a Director at pipeline researcher East Daley Capital. Other pipelines between Canada and the U.S. are at or near capacity, East Daley and Wood Mackenzie estimate. "There's nowhere near enough to take 600,000 bpd. There's just not enough pipe right now," O'Donnell said. Refineries in the U.S. Midwest may be more affected depending on when the line is restarted.

The spill in Kansas took place downstream from a key junction in Steele City, Nebraska, where Keystone splits to run into Illinois. That stretch of the line could be restarted, but the other segment affected by the spill will not come back until regulators approve a restart. By contrast, Gulf Coast refiners can draw on more sources for crude, both from offshore Louisiana facilities and from countries like Colombia, Mexico and Ecuador.

Still, volumes to the Gulf from Cushing have already dropped. Volumes on TC Energy's Marketlink pipeline, which flows from Cushing to Nederland, Texas, fell by about 300,000 bpd to less than 500,000 bpd, Wood Mackenzie estimates, after the leak was discovered.

That could leave the Gulf Coast refineries short of heavy Canadian barrels. U.S. physical crude oil grade prices were mixed on Thursday and O'Donnell at East Daley Capital said he expects volatility to continue as long as Keystone remained offline. Meanwhile, a lengthy shutdown of the pipeline could lead to Canadian crude getting bottlenecked in Alberta, and drive prices lower, although the market's reaction on Friday was muted.

We remind, ExxonMobil expects to double earnings and cash flow potential by 2027, and will increase investments in lower-emissions efforts, the company said on Thursday in news release detailing plans for the next five years, said the company. The corporate plan through 2027 maintains annual capital expenditures at USD20bn-USD25bn, while growing lower-emissions investments to approximately USD17bn.
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India's fuel demand climbed to an eight-month high in November, as festivals and a pick-up in industrial activity boosted sales in the world's No. 3 oil consumer, said Hydrocarbonprocessing.

Consumption of fuel, a proxy for oil demand, was 2.4% higher than the previous month, and rose 10.2% year-on-year to 18.84 MMt in November, according to the data from Indian oil ministry's Petroleum Planning and Analysis Cell (PPAC). "The festive season has been supporting oil demand growth," said Refinitiv analyst Ehsan Ul Haq. "Demand growth might slow slightly in the next few months as present expansion has been from a low base, but since the Indian economy is robust, we'll continue to see high consumption numbers," Ul Haq added.

Retail sales always peak during October-November, when the nation of 1.4 B celebrates major festivals of Dussehra and Diwali. India's factory activity in November expanded at its fastest pace in three months to 55.7, compared with 55.3 in October, showed the Manufacturing Purchasing Managers' Index, compiled by S&P Global.

Sales of diesel, which account for about four-fifth of India's refined fuel demand, were up 19.1% from 2021 at 7.76 MMt, while sales of gasoline, or petrol, rose 8.1% at 2.86 MMt, the PPAC data showed. The rise in diesel demand "points to a strong economy," said Ul Haq, noting a pick-up in private as well as public transport demand along with a recovery in demand from the agricultural sector after the monsoon season.

Cooking gas or liquefied petroleum gas (LPG) sales increased 5.2% to 2.47 MMt, while naphtha sales fell 18.2% to 1.01 MMt. Sales of bitumen, used for making roads, rose 30.3% while fuel oil use edged up 8.4% in November.

We remind, there are signs that China and India are pulling back from buying Russian crude oil ahead of the Group of Seven nations' proposed price cap and a European Union ban on imports. However, the more important question for the market is whether any slowing by China and India of purchases from Russia is a temporary factor that will be reversed once participants figure out how to work with, or around, the price cap.
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Germany expects a decision next week on how the Schwedt refinery will be supplied as a ban on Russian oil takes effect, the Economy Ministry said, as per Hydrocarbonprocessing.

Berlin aims to eliminate imports of oil from Russia by the end of the year, applying European Union sanctions, and has for months been working with Poland to secure supply for Schwedt, which provides 90% of Berlin's fuel. The two sides want to ensure Polish refineries in Gdansk and Plock as well as German ones in Schwedt and Leuna are adequately supplied with crude oil, ministers from both countries said earlier this month.

The two governments on Thursday met in Berlin to discuss how the two German refineries could continue to operate after the embargo on Russian oil comes into effect. "Talks have been very good," a spokeswoman for the Economy Ministry said in response to a Reuters query. "We are now evaluating the talks within the federal government and are currently expecting a decision from the federal government by the end of next week," the spokesperson added.

Germany in September took control of the Schwedt refinery, which was majority owned by Russia's Rosneft, as part of efforts to shore up the country's energy supply. It put Rosneft Deutschland under a trusteeship of the German industry regulator but Rosneft still holds 54.17% of the refinery. Schwedt's co-shareholders are oil major Shell with a 37.5% stake, and Italy's Eni, which holds 8.33%.

Germany and Poland this month signed a memorandum of understanding on oil logistics, which could unlock non-Russian flows and help Poland's top refiner, PKN Orlen, pursue its interest in Schwedt.

As per MRC, Poland is seeking German support to slap EU sanctions on the Polish-German section of the Druzhba crude pipeline so Warsaw can abandon a deal to buy Russian oil next year without paying penalties. Poland is seeking German support to slap EU sanctions on the Polish-German section of the Druzhba crude pipeline so Warsaw can abandon a deal to buy Russian oil next year without paying penalties.

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MRC) - China may close the year with record shipments of key transportation fuels in December as refiners rush to use their export quotas and maximize overseas profits to compensate for tepid domestic fuel demand caused by COVID-related curbs, said Hydrocarbonprocessing.

December exports of diesel, gasoline and aviation fuel combined are estimated at 6.5 million to 7.1 million tons, led by diesel shipments that could reach 3 million tons, according to estimates from Chinese consultancy Longzhong and JLC, Refinitiv Oil Research and several trading sources.

China's diesel exports hit an all-time high of 2.83 million tons in March 2020, followed by a record 6.5 million tons in April for all three products, according to Chinese customs data. Bumper shipments from China will weigh on Asian refining margins, particularly for diesel, as refiners' profit from producing the fuel from Dubai crude has already shed 15%-30% month-on-month amid sufficient regional supplies and a closed arbitrage to European markets.

Beijing's abrupt relaxation of COVID rules this week aren't likely to reverse the outflows as substantial recovery in local demand may take months to materialize, market participants said. Despite earlier expectations that part of the large set of quotas released in October could be extended into 2023, it became clear in recent weeks that refiners were being encouraged to finish them all by end-December, three trading sources said.

"Chinese refiners are still grappling with high domestic inventories, especially for gasoline and more recently gasoil," said Daphne Ho, senior analyst at consultancy Wood Mackenzie. "Healthier export margins has been a key push factor."

State refiners, which control most of the export quotas, have since November been ramping up diesel production to cash in lucrative overseas sales. Despite recent declines, refining profits for both 10 ppm sulfur gasoil and jet fuel have more than doubled this year on tight global supplies.

"State majors are very much margin-oriented and they will only redirect volumes if there is better profit elsewhere," said one China-based trading source. Gasoline exports were pegged at 2.1 million to 2.3 million tons for December, likely to surpass a record 1.9 million tons from April 2020.

We remind, Ineos has agreed a fourth joint venture with Sinopec that will see it take a 50% share in the Tianjin Nangang project, which is currently underway and due to go on stream at the end of 2023, said Chemanager-online.
“This latest joint venture with Sinopec significantly expands Ineos’ petrochemical production and business footprint in China. It is a further example of the close relationship and growing collaboration between Sinopec and Ineos,” said Ineos chairman and CEO Jim Ratcliffe.
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