Tag Archives: Energy

Brazil’s free market agenda is in doubt as the president hopes for re-election | Instant News

SÃO PAULO – Brazil’s Economy Minister Paulo Guedes, who just two years ago pledged to lead a free-market revolution in Latin America’s largest country, is increasingly finding himself relegated to breaking control as President Jair Bolsonaro deepens the role of the state in the economy.

Guedes’ mission to lower public debt and build investor confidence in Brazil took a hit after the country’s far-right leader on Friday nominated a new head of the country’s oil company.

Brazilian Oil

SA, or Petrobras, spurred investor flight this week from the nation’s equities and currencies.

With a focus on re-election next year, Mr Bolsonaro, a former army captain who has publicly said he knows nothing about the economy, nominated a military man to the helm of the company after the current chief executive refused to lower fuel prices.

Petrobras said Tuesday it will schedule meeting to assess presidential nominations of a new CEO.

“It is now clear that the president himself is not as committed to a liberal economic agenda as the public once thought, even though his finance minister does,” said Bernard Appy, former secretary of economics at the ministry.

The Petrobras Refinery in Rio de Janeiro; the company said it would meet to assess President Jair Bolsonaro’s candidacy as new CEO.


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Guedes, a 71-year-old investment banker who only entered politics in 2019 when Bolsonaro took office, has remained silent since the president on Friday night appointed General Joaquim Silva e Luna as CEO of Petrobras. Mr Bolsonaro and Mr Guedes declined requests on Wednesday for comment.

A person close to the minister said the economist who graduated from the University of Chicago had no intention of leaving Bolsonaro.

The minister knows that his exit will only scare investors even more, and he still believes he will have the opportunity to undertake a series of reforms to improve Brazil’s business environment, such as simplifying the country’s Byzantine tax system and introducing new rules to curb government spending, said a familiar person. with ministerial thoughts.

“Of course he is not happy with what happened [at Petrobras], “Said the man, adding that the minister felt less responsible for oil producers than other areas of the economy because it was under the scope of the ministry of mining and energy.

Brazil’s Minister of Mines and Energy, Bento Albuquerque, an admiral in the Navy, said in an interview that the government was simply seeking greater stability in fuel prices, denying that it would intervene or force Petrobras to pay subsidies.

“It is the president’s prerogative as controlling shareholder to appoint whoever he wants,” he said, adding that the government was studying ways to avoid sharp swings in fuel prices, including creating funds that could be announced in two months.

In an interview with The Wall Street Journal in October, Guedes described how he had long planned to venture into politics, his hopes were high for what he could achieve.

Co-founder of Latin America’s largest investment bank, BTG Pactual, Guedes says he has been inspired by the likes of Ronald Reagan and Margaret Thatcher to reduce the size of Brazil’s swelling government.

“We will give up market power,” said Guedes, defending the president.

“Bolsonaro really wants to change the country,” he said. He explained that he sees Bolsonaro’s government as an alliance of liberal and conservative economies and is the country’s best bet to decide the way of the two left-spending presidents who have preceded Bolsonaro.

The support of Mr Guedes during Mr Bolsonaro’s election campaign was critical to getting votes from centrists and business leaders, sealing a conservative victory.

But the others saw Mr. promise. Guedes as unrealistic and naive, shows the mentality of a business leader who has never worked with politicians before.

“He created expectations of a liberal revolution that he never had the means to carry out,” Luiz Carlos Mendonça de Barros, former head of Brazil’s state bank BNDES, told the Folha de S.Paulo newspaper. We watched and laughed, anyone who has experienced the boundaries of politics knows what I mean.

Mr. Government. Bolsonaro is off to a good start in the eyes of investors. In its first year in office, the country went through a long-awaited overhaul to downplay Brazil’s generous pension system, which is estimated to have saved public accounts an estimated $ 200 billion over a decade.

The president filled his government with market-friendly figures, appointing another Chicago alumni, Roberto Castello Branco, as chief executive of Petrobras. Meanwhile, Guedes set his sights on the privatization of hundreds of state-owned companies, from banks and power companies to the state postal service.

Slow progress. Then the pandemic hit.

Covid-19 has hit Brazil, killed a quarter of a million people, and sparked widespread criticism of Mr crisis management. Bolsonaro. Faced with growing demands from political opponents for his impeachment, the great leader returned to the populist movement to please his political base – a strategy analysts say marked his nearly three decades as a congressman.

If successful, Bolsonaro will ensure his short-term political viability and increase his chances of being re-elected in next year’s presidential election, political scientists say.

Bolsonaro issued a presidential decree to loosen gun ownership rules with a nod to his conservatives, while supporting a program of generous payments for the poor. Mr Guedes, seeking to safeguard the country’s fiscal health, has suggested paying less than $ 40 a month per person; the government has tripled that figure.

After spending as much as $ 10 billion a month on payments during last year’s pandemic, the country is preparing to resume payments in the coming weeks. Brazil released figures on Wednesday showing its public debt hit a record in January, rising to an estimated $ 930 billion.

But many investors see Bolsonaro’s nomination of Petrobras as the boldest move, contradicting his administration’s promise to reduce the size of the country in the economy and the president’s own promise to let the country’s oil companies set prices according to international markets. .

On Monday, on the first full trading day following Mr Bolsonaro’s candidacy for General Silva e Luna, investors fled Petrobras, wiping out about $ 13 billion from the company’s market value, the second biggest daily loss for the company since the 1990s.

The candidacy followed a dispute between Bpk. Bolsonaro and the current CEO of Petrobras are concerned about rising fuel prices, fueling concerns that the president intends to force companies to fund fuel subsidies in the country again – policies that cost around $ 30 billion between 2011 and 2016 under leftist administration.

While oil producer stocks have recovered since then, economists say it will take a long time to repair the damage to the reputation of companies and countries.

“Who is a Brazilian or foreign investor who wants to buy Petrobras shares?” said Maílson da Nóbrega, a Brazilian economist and former finance minister who praised Guedes for his optimism. “I thought [Mr. Guedes] hopes that he can push for reforms and leave his legacy, but it is becoming increasingly difficult. “

Write to Luciana Magalhaes and [email protected] and Samantha Pearson at [email protected]

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Viva Energy Australia posted an annual loss as the pandemic hit demand | Instant News

FILE PHOTOS: Logo of Viva Energy refinery and fuel distributor, depicted in Corio, Victoria, Australia, 28 June 2020. REUTERS / Sonali Paul

(Reuters) – Australian fuel supplier Viva Energy Group on Wednesday reported a full-year loss compared to last year’s gain, impacted by falling global fuel demand due to the COVID-19 pandemic.

Coronavirus-related curbs on international travel and a domestic lockdown hit the refinery market for most of 2020, impacting their profits and jeopardizing the future of their factories.

Viva’s underlying net loss on taxes on a replacement cost basis was A $ 35.9 million ($ 28.4 million) in the year ended December 31, compared to A $ 135.8 million profit in the prior year.

The Victoria-based company said sales volumes for the year fell 16% to 12,339 million liters, within the company’s forecast range of 12,250 to 12,350 ml provided in December.

The company’s refinery operations resulted in an underlying EBITDA loss on a replacement cost basis of A $ 95.1 million in 2020 due to the pandemic. Replacement costs eliminate the impact of crude oil inventories and foreign exchange movements.

Viva also said it had made material progress in developing its gas terminal project at Geelong in Victoria, which the company wanted to revive following threats of closure.

($ 1 = 1.26 Australian dollars)

Reporting by Nikhil Subba and Tejaswi Marthi in Bengaluru; Edited by Forward Samuel


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The EU says it doesn’t need Nord Stream 2, but only Germany can block it | Instant News

BRUSSELS (Reuters) – The European Union does not need the Nord Stream 2 pipeline for its energy security but any decision to stop a project bringing Russian natural gas to Germany must come from Berlin, a senior European Commission official said on Tuesday.

FILE PHOTO: A worker is seen at the gas pipeline construction site Nord Stream 2, near the city of Kingisepp, Leningrad region, Russia, June 5, 2019. REUTERS / Anton Vaganov

The $ 11 billion pipeline project led by Russian state energy company Gazprom, whose completion is more than 90%, will double the capacity of an existing submarine pipeline passing through Ukraine and eliminate Kyiv’s transit costs.

The project pits Germany, the EU’s biggest economy, against central and eastern European countries that say it will increase the bloc’s dependence on Russian gas.

“For the EU as a whole, Nord Stream does not contribute to the security of supplies,” Ditte Juul Jorgensen, director general of the Commission’s energy department, told lawmakers on the European Parliament’s industry committee.

Investments over the past decade in other pipelines, liquefied natural gas import terminals and interconnectors in Europe have secured sufficient supplies to meet the bloc’s energy needs, he said.

Any decision to stop the project must be made by Germany, said Juul Jorgensen.

“Actually stopping development requires a decision at the national level. That is not a decision that can be taken at the European level, “he said.

Nord Stream 2 is facing increased scrutiny as European relations with Russia deteriorate over the treatment of Kremlin critic Alexei Navalny.

The European Parliament last month asked the European Union to stop building a pipeline in response to Navalny’s arrest.

On Monday, EU foreign ministers agreed to impose sanctions on four senior Russian officials close to President Vladimir Putin, in large part symbolic action on the issue.

Despite US sanctions on the pipeline, Berlin is sticking to Nord Stream 2, which it says is a commercial project.

(This story adds the dropped “official” word)

Reporting by Kate Abnett; Edited by Sonya Hepinstall


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Australia’s recent emissions cuts are likely to turn around in recovery from Covid and drought | Environment | Instant News

Much of Australia’s reduction in greenhouse gas emissions last year is likely to be wiped out as transport recovers after the Covid-19 lockdown and agriculture recovers from a long-term drought, according to a national climate data audit.

Scott Morrison to the National Press Club earlier this month the government “resumed” emission reductions, citing official data that found emissions fell 3% in the year to June to the lowest level since 1998. He stated “this is a fact”.

An audit by Hugh Saddler, an energy consultant and honorary professor at the ANU Crawford school of public policy, suggests at least some of the decline is likely to be lost.

Graph of greenhouse gases by sector

The monthly national energy emissions audit, published by the Australian Institute, found a reduction in carbon pollution of about 4.5% over the two years to 2020. This is largely due to surges in solar and wind power, but also related to the impact of the Covid-19 shutdown, especially on transportation, and the continuing effects of long-term drought, which significantly reduced the numbers of sheep and cattle.

The audit found cuts in the last two categories were unlikely to continue.

The end of lockdowns and restrictions on domestic travel means emissions from road and aviation traffic are likely to “revert to previous upward trends”.

Likewise, agricultural emissions are likely to increase as drought conditions subside and livestock numbers and crop production increase, in line with government projections. Nearly 80% of agricultural emissions come from livestock and agriculture.

Saddler said it underscored that recent national emission reductions were largely due to external conditions, not climate policy. The Morrison government does not have a comprehensive policy to reduce emissions from transportation or agriculture.

He said the government’s discussion paper on “future fuels” on reducing emissions from transportation did not offer “almost nothing”, and the government had no plans to reduce agricultural emissions. Several Members of the National Parliament argued that the sector should be excluded of climate commitments, a stance that has put them at odds with farmer groups who are calling for a net zero emissions target by 2050.

“Power plant emissions will continue to fall but, in the absence of significant policy changes, the reduction from this sector will be offset by continuing to increase transportation emissions,” said Saddler.

“Total emissions from all sectors other than power generation will remain almost unchanged from 2018.”

The audit is consistent with official emission projections released in December, which estimates national carbon pollution will fall by less than 7% over the next decade under current policies.

The projection report shows that the Morrison government is not yet on track to meet Australia’s 2030 emissions target under the Paris climate conference (a 26% to 28% reduction to 2005 levels). Conversely, the policy set will result in a 22% cut during that time period. More than half were achieved before the Coalition was elected in 2013.

Morrison said the government wants Australia to achieve net zero emissions as soon as possible, and preferably by 2050, through a “technology, not tax” approach, but has not explained how its policy will achieve that.

Richie Merzian, director of the Australian Institute’s climate and energy program, said emissions from vehicles and agriculture are now almost the same as emissions from the entire electricity sector.

“There is a real opportunity for the federal government to set the country towards net zero emissions by 2050, if not sooner, but this will require sector-level plans for transportation and agriculture,” he said.

The audit has looked at changes in emissions in the national electricity market, which includes five eastern states and the Australian Capital Territory, since 2008.

Change in energy fuel type graph

They fell 26.5% during that time as coal-fired power plants shut down and reduce their operating capacity, and wind and solar energy made up a larger share of the electricity supply.

The surge in renewable energy investment has been driven largely by national renewable energy targets – which are filled in 2019 and not renewed or replaced – and aided by country targets and rapid reductions in the cost of solar and wind energy technologies. Renewable energy including solar power on the roof now provides about 27% of the annual electricity.

Even though Covid-19 was under lockdown, electricity use fell only 0.6% between February and November last year. But the amount of electricity generated by burning coal fell by nearly 8% in New South Wales and Queensland between late 2019 and late 2020.

Saddler said the NSW Electricity Infrastructure Investment Act, which is bypassing the state parliament in November and pledging to cover 12 gigawatts of new solar and wind power and 2GW of long-term storage, will be a significant development in managing the switch to variable renewable energy.


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Texas Blackout Raises Australian Banks To $ 215 Million | Instant News

Freeze it plunging millions of Texans into darkness rippling through energy markets in unpredictable ways, yielding financial gains for Australian banks and severe suffering for other companies caught in the disruption.

Extreme weather froze wind turbines and oil and gas wells, shut down oil refineries and pushed power plants out of operation, sending shocks through energy markets. Wholesale electricity prices skyrocketed, as did spot prices for natural gas in Texas, Oklahoma, Kansas, and Arkansas.

The turbulence brings profit to commodity traders at Macquarie Group Ltd. Australia, whose ability to deliver gas and electricity across the country allows it to take advantage of soaring demand and prices in states like Texas.

The bank raised its guidance on Monday for revenue this year through March to reflect windfall winds. It said that the net profit after tax would be 5% to 10% higher than for fiscal year 2020. That equates to an increase of up to 273.1 million Australian dollars or the equivalent of approximately $ 215 million. In an earlier guide, issued Feb.9, Macquarie said it expects profits to drop slightly in 2020.

“Extreme winter weather conditions in North America have significantly increased short-term client demand for Macquarie’s ability to maintain critical physical supplies across the commodity complex, and in particular in relation to gas and electricity,” the bank said.


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