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Bolsonaro backers sack Brazil presidential palace, Congress, Supreme Court

BRASILIA, Jan 8 (Reuters) – Supporters of Brazil’s far-right former President Jair Bolsonaro invaded the country’s Congress, presidential palace and Supreme Court on Sunday, in a grim echo of the U.S. Capitol invasion two years ago by fans of former President Donald Trump.

Leftist President Luiz Inacio Lula da Silva, who defeated Bolsonaro in an October election, announced a federal security intervention in Brasilia lasting until Jan. 31 after capital security forces were initially overwhelmed by the invaders.

Lula, who was only inaugurated on Jan. 1, blamed Bolsonaro for inflaming his supporters after a campaign of baseless allegations about potential election fraud following the end of his rule marked by divisive nationalist populism.

The president’s allies also raised questions about how public security forces in the capital Brasilia were so unprepared and easily overwhelmed by rioters who had been planning on social media for days to gather for weekend demonstrations.

“These vandals, who we could call … fanatical fascists, did what has never been done in the history of this country,” said Lula in a press conference during an official trip to Sao Paulo state. “All these people who did this will be found and they will be punished.”

The capital invaders left a trail of destruction in their wake, throwing furniture through the smashed windows of the presidential palace, flooding parts of Congress with a sprinkler system and ransacking ceremonial rooms in the Supreme Court.

The sight of thousands of yellow-and-green clad protesters running riot in the capital capped months of tension following the Oct. 30 vote.

Bolsonaro, an acolyte of Trump’s who has yet to concede defeat, peddled the false claim that Brazil’s electronic voting system was prone to fraud, spawning a violent movement of election deniers.

“This genocidist … is encouraging this via social media from Miami,” Lula said, referring to Bolsonaro. “Everybody knows there are various speeches of the ex-president encouraging this.”

Bolsonaro was silent for nearly six hours about the chaos in Brasilia before posting on Twitter that he “repudiates” Lula’s accusations against him.

The former president, who has rarely spoken in public since losing the election, also said peaceful demonstrations are part of democracy but invading and damaging public buildings “crosses the line.” He flew to Florida 48 hours before the end of his mandate and was absent from Lula’s inauguration.

The violence in Brasilia could amplify the legal risks Bolsonaro faces. It also presents a headache for U.S authorities as they debate how to handle his stay in Florida. Prominent Democratic lawmakers said the United States could no longer grant Bolsonaro “refuge” in the country.

The Bolsonaro family lawyer, Frederick Wassef, did not respond to a request for comment.

By 6:30 p.m. local time (2130 GMT), some three hours after initial reports of the invasion, security forces had managed to retake the capital’s most iconic three buildings.

Brasilia Governor Ibaneis Rocha, a longtime Bolsonaro ally facing tough questions after Sunday’s security lapses, said on Twitter more than 400 people had been arrested and authorities were working to identify more.

The invasions were condemned by leaders around the world.

U.S. President Joe Biden called the events an “assault on democracy and on the peaceful transfer of power,” adding that Brazil’s democratic institutions had full U.S. support.

“Using violence to attack democratic institutions is always unacceptable,” U.S. Secretary of State Antony Blinken wrote on Twitter. “We join Lula in urging an immediate end to these actions.”

Far from the capital, Brazilian industries were on alert for a fresh round of unrest from Bolsonaro supporters, whose post-election highway blockades have disrupted grains shipments and meatpacking operations in recent months.

State-run oil company Petrobras stepped up security at its refineries, in a cautionary measure after attack threats against assets including Brazil’s biggest fuel plant, three company officials said, declining to be named as information is private.

Petroleo Brasileiro SA (PETR4.SA), as the company is formally known, said in a statement that all its assets and refineries are operating normally.

Analysts warned the unrest could trigger more volatility in Brazil’s financial markets, which have swung sharply in recent weeks on doubts about how Lula will reconcile big spending promises with stretched public finances.

JUDGES DENOUNCE “TERRORISTS”

The Supreme Court, whose crusading Justice Alexandre de Moraes has been a thorn in the side of Bolsonaro and his supporters, was ransacked by the invaders, according to images from social media showed protesters clubbing security cameras and shattering the windows of the modernist building.

Both Moraes and the court’s Chief Justice Rosa Weber vowed punishment for the “terrorists” who had attacked the country’s democratic institutions. The heads of both houses of Congress denounced the attacks publicly and moved up plans to fly back to the capital, according to people familiar with the matter.

Rocha, the Brasilia governor, said he had fired his top security official, Anderson Torres, previously Bolsonaro’s justice minister. The solicitor general’s office said it had filed a request for the arrest of Torres.

Torres told website UOL he was with his family on holiday in the United States and had not met with Bolsonaro. UOL reported he was in Orlando, where Bolsonaro is now staying.

“Vandalism and ransacking will be combatted with the rigor of the law,” Anderson tweeted on Sunday afternoon, adding he had directed police in the capital to restore order urgently.

On Saturday, with rumors of a confrontation brewing in Brasilia, Justice Minister Flávio Dino authorized the deployment of the National Public Security Force. On Sunday, he wrote on Twitter, “this absurd attempt to impose the will by force will not prevail.”

In Washington in 2021, Trump supporters attacked police, broke through barricades and stormed the Capitol in a failed effort to prevent congressional certification of Joe Biden’s 2020 election victory.

Trump, who has announced a third bid for the presidency, in 2024, had pressured his vice president, Mike Pence, not to certify the vote, and he continues to claim falsely that the 2020 election was stolen from him through widespread fraud.

Reporting by Adriano Machado, Anthony Boadle, Lisandra Paraguassu, Ricardo Brito, Peter Frontini, Gabriel Araujo; Writing by Gabriel Stargardter; Editing by Brad Haynes, Daniel Wallis and Lincoln Feast.

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Brazil markets tumble on Lula’s first full day in office

BRASILIA, Jan 2 (Reuters) – Brazilian markets delivered a withering verdict on leftist President Luiz Inacio Lula da Silva’s first full day in office on Monday, after he pledged to prioritize social issues and ordered a budget-busting extension to a fuel tax exemption.

Lula’s decision to extend the fuel tax exemption, which will deprive the Treasury of 52.9 billion reais ($9.9 billion) a year in fiscal income, was a stinging rebuke of his finance minister Fernando Haddad, a Workers Party (PT) loyalist who had said it would not be extended.

Haddad, who is seeking to dispel market fears that he might not maintain fiscal discipline, took office on Monday, pledging to control spending. “We are not here for adventures,” he said.

Markets seemed unconvinced.

The real currency lost 1.5% in value against the dollar in afternoon trading, while the benchmark Sao Paulo stock market index (.BVSP) ended 3.06% down. Shares of state-run oil company Petrobras (PETR4.SA) retreated nearly 6.45%.

In speeches delivered at his inauguration in Brasilia on Sunday, Lula promised that tackling hunger and poverty would be “the hallmark” of his third presidency after two previous stints running the country from 2003 to 2010.

Financial analysts said the start of Lula’s third presidency was in line with his campaign promises, and looked similar to earlier Workers Party policies that led to a deep recession.

Lula narrowly defeated far-right incumbent Jair Bolsonaro in October, swinging South America’s largest nation back on a left-wing track.

On Monday, Lula instructed ministers to revoke steps to privatize state companies taken by the previous administration, including studies to sell Petrobras, the Post Office and state broadcasting company EBC.

On Sunday, he signed a decree extending an exemption for fuels from federal taxes, a measure passed by his predecessor aimed at lowering their cost in the run-up to the election, but which will deprive the Treasury of 52.9 billion reais ($9.9 billion) a year in fiscal income.

The federal tax exemption for fuels will last one year for diesel and biodiesel and two months for gasoline and ethanol, a decree published in the official gazette showed on Monday.

Gabriel Araujo Gracia, analyst at Guide Investimentos, said Lula’s plans to increase social spending, expand the role of state banks and abolish a constitutionally mandated spending ceiling harked back to the worst days of Workers Party rule.

“The policies remind us of Dilma Rousseff’s government rather than Lula’s,” Gracia said, referring to Lula’s handpicked successor, who was impeached while in office. “Her policies led to Brazil’s worst recession since 1929.”

Lula, who lifted millions of Brazilians from poverty during his first two terms, criticized Bolsonaro for allowing hunger to return to Brazil, and wept during his speech to supporters on Sunday as he described how poverty had increased again.

Allies said Lula’s newfound social conscience was the result of his 580 days in prison, Reuters reported on Sunday.

Lula kicks off his third presidential term after persuading Congress to pass a one-year, 170 billion-reais increased social spending package, in line with his campaign promises.

“The package ended up being bigger than expected, with potential repercussions for public debt sustainability,” Banco BTG Pactual said in a research note.

Lula spent his first day in office meeting with more than a dozen heads of state who attended his inauguration.

The meetings started with the king of Spain, and continued with South American presidents, among them the leftist leaders of Argentina, Chile and Bolivia, as well as representatives from Cuba and Venezuela, and Vice President Wang Qishan of China.

On Twitter, Lula said he had received a letter from Chinese leader Xi Jinping expressing a desire to increase cooperation between the two countries.

“China is our biggest trading partner, and we can further expand relations between our countries,” Lula added.

The new president is also set to attend the wake of Brazilian soccer star Pele, who died on Thursday at 82 after battling colon cancer.

Lula will pay his respects and pay tribute to Pele and his family on Tuesday morning, the president’s office said in a statement.

($1 = 5.3633 reais)

Reporting by Anthony Boadle, Marcela Ayres and Gabriel Araujo; Editing by Matthew Lewis and Jonathan Oatis

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Storm cuts U.S. oil, gas, power output, sending prices higher

Dec 23 (Reuters) – Frigid cold and blowing winds on Friday knocked out power and cut energy production across the United States, driving up heating and electricity prices as people prepared for holiday celebrations.

Winter Storm Elliott brought sub-freezing temperatures and extreme weather alerts to about two-thirds of the United States, with cold and snow in some areas to linger through the Christmas holiday.

More than 1.5 million homes and businesses lost power, oil refineries in Texas cut gasoline and diesel production on equipment failures, and heating and power prices surged on the losses. Oil and gas output from North Dakota to Texas suffered freeze-ins, cutting supplies.

Some 1.5 million barrels of daily refining capacity along the U.S. Gulf Coast was shut due to the bitterly cold temperatures. The production losses are not expected to last, but they have lifted fuel prices.

Knocked out were TotalEnergies (TTEF.PA), Motiva Enterprises (MOTIV.UL) and Marathon Petroleum (MPC.N) facilities outside Houston. Cold weather also disrupted Exxon Mobil (XOM.N), LyondellBasell (LYB.N) and Valero Energy (VLO.N) plants in Texas that produce gasoline, diesel and jet fuel.

Sempra Infrastructure’s Cameron LNG plant in Louisiana said weather disrupted its production of liquefied natural gas without providing details. Crews at the 12 million tonne-per-year facility were trying to restore output, it said.

Freeze-ins – in which ice crystals halt oil and gas production – this week trimmed production in North Dakota’s oilfields by 300,000 to 350,000 barrels per day, or a third of normal. In Texas’s Permian oilfield, the freeze led to more gas being withdrawn than was injected, said El Paso Natural Gas operator Kinder Morgan Inc. (KMI.N).

U.S. benchmark oil prices on Friday jumped 2.4% to $79.56, and next-day gas in west Texas jumped 22% to around $9 per million British thermal units , the highest since the state’s 2021 deep freeze.

Power prices on Texas’s grid also spiked to $3,700 per megawatt hour, prompting generators to add more power to the grid before prices fell back as thermal and solar supplies came online.

New England’s bulk power supplier said it expected to have enough to supply demand, but elsewhere strong winds led to outages largely in the Southeast and Midwest; North Carolina counted more than 187,000 without power.

“Crews are restoring power but high winds are making repairs challenging at most of the 4,600 outage locations,” Duke Energy spokesman Jeff Brooks wrote on Twitter.

Heating oil and natural gas futures rose sharply in response to the cold. U.S. heating oil futures gained 4.3% while natural gas futures rose 2.5%.

In New England, gas for Friday at the Algonquin hub soared 361% to a near 11-month high of $30 mmBtu.

About half of the power generated in New England comes from gas-fired plants, but on the coldest days, power generators shift to burn more oil. According to grid operator New England ISO, power companies’ generation mix was at 17% from oil-fired plants as of midday Friday.

Gas output dropped about 6.5 billion cubic feet per day (bcfd) over the past four days to a preliminary nine-month low of 92.4 bcfd on Friday as wells froze in Texas, Oklahoma, North Dakota, Pennsylvania and elsewhere.

That is the biggest drop in output since the February 2021 freeze knocked out power for millions in Texas.

One billion cubic feet is enough gas to supply about 5 million U.S. homes for a day.

Reporting by Erwin Seba and Scott DiSavino; additional reporting by Arathy Somasekhar and Laila Kearney; editing by Jonathan Oatis, Kirsten Donovan, Aurora Ellis and Leslie Adler

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Scott Disavino

Thomson Reuters

Covers the North American power and natural gas markets.

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Keystone cleanup turns remote Kansas valley into a small town

WASHINGTON, Kan., Dec 18 (Reuters) – Farmer Bill Pannbacker got a call earlier this month from a representative from TC Energy Corp , telling him that its Keystone Pipeline, which runs through his farmland in rural Kansas, had suffered an oil leak.

But he was not prepared for what he saw on his land, which he owns with his wife, Chris. Oil had shot out of the pipeline and coated what he estimated was nearly an acre of pasture uphill of the pipe, which is set into a valley.

The grass was blackened with diluent bitumen, one of the thickest of crude oils, which was being transported from Canada to the Gulf of Mexico.

The rupture on Dec. 7 is the third in the last five years for the Keystone Pipeline, and the worst of the three – more than 14,000 barrels of crude has spilled and cleanup is expected to take weeks or months.

TC has not said when repairs could be completed and a 96-mile (155-km) segment of the pipeline will restart. Crews will remain busy on site through the holidays and completion of the cleanup depends on weather and other factors, the Canadian company said in a statement.

“We are committed to restoring the affected areas to their original condition or better.”

BEEHIVE OF WORKERS

Keystone’s two previous spills happened in unincorporated areas in North Dakota and South Dakota. And while the city of Washington, Kansas, is small with just over 1,000 residents, it is surrounded by farms where wheat, corn, soybeans are planted and cattle are raised. The spill in Washington County affected land owned by several people.

The once-quiet valley is currently a construction site buzzing with some 400 contractors, staff from pipeline operator TC Energy, and federal, state and local officials. They are working into the night, leaving a glow from the high-intensity lamps seen from miles away.

Cranes, storage containers, construction equipment and vehicles stretch for more than a half mile from the site of the rupture. The valley has become almost a small town, with several Quonset-style huts erected for workers.

Aerial photos showed a large, blackened swath of land that almost looks like an airborne object is throwing a shadow over the land. Pannbacker said that pasture was used for cattle grazing and calving, but with calving season over, there were no livestock there at the time.

The oil-blackened grass on the land, which is owned by Pannbacker and his sisters as part of a family trust, is now completely gone. It was scraped away and is now confined to a giant mound of dirt that is noticeably darker at the bottom. But oil droplets on plants further up the hill were still visible.

WIDER GROUP AFFECTED

Living in rural Kansas, the Pannbackers are used to preparing for harsh weather, but not an oil spill. Residents have been largely unconcerned despite the accident, even as the area will resemble a work site for the near-future.

“How many people have experienced an oil spill? Who knows what it’s like?” said Chris Pannbacker. “It’s not like a tornado or a natural disaster.”

Kansas State Representative Lisa Moser in a Facebook post said there are 14 landowners who are being compensated for either the spill or the use of their property during cleanup.

TC said it is discussing compensation with landowners but would keep details private. The company said it has stayed in regular contact with landowners. Pannbacker said TC has not yet discussed compensation with them yet.

Pannbacker says he does not expect the grass on the pastureland to return for at least two or three years; there is a well site on the pasture used for the cattle that they will not be using either.

Reporting by Erwin Seba in Washington, Kan.; additional reporting by Rod Nickel; writing by David Gaffen
Editing by Marguerita Choy

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German car giants and Asian battery kings: a match made in Hungary

  • German, Chinese and S.Koreans head to Hungary
  • They dominate auto investment and subsidies
  • Orban’s Hungary keen to court foreign business

BERLIN/BUDAPEST, Dec 13 (Reuters) – German automakers and Asian battery suppliers are getting together in Hungary in a multi-billion-dollar marriage of convenience to drive their electric ambitions.

The companies are flocking to central Europe, where Viktor Orban’s government is defying Western wariness of China and offering generous benefits to host foreign operations and stake Hungary’s claim as a global centre for electric vehicles (EVs).

Investment in the Hungarian auto industry is being dominated by three countries – Germany, a champion carmaker, plus China and South Korea, EV battery leaders way ahead of European rivals.

Companies from those three countries have accounted for 29 out of the 31 cash subsidies handed out by Hungary for major investments in its auto and battery sector over the past decade, according to a Reuters analysis of government data that shows the scale of German, Chinese and Korean convergence there.

“Cathodes, anodes, separators, assembly lines, the full battery supply chain is here,” said Dirk Woelfer of the German-Hungarian Chamber of Commerce in Budapest. “This is a foot in the door to Europe.”

Recipients of such subsidies included the likes of German automakers BMW (BMWG.DE) and Mercedes-Benz (MBGn.DE), and battery makers such as China’s BYD and Korean rival Samsung SDI (006400.KS). The median subsidy level has been 15% of investment.

In total, Hungary has received over 14 billion euros ($15 billion) in foreign direct investment into its battery sector alone in the past six years, according to government figures.

Major investments are broadly classed as those worth over 5-10 million euros, varying with factors such as jobs created.

State incentives and the opportunity for automakers and battery suppliers to work next door to each other is proving a strong pull, according to interviews with about 20 industry players and consultants in Germany, Hungary, China and South Korea.

China’s CATL (300750.SZ), the world’s No. 1 EV battery maker, and Korean battery giants SK Innovation (096770.KS) and Samsung SDI, all told Reuters that the planned proximity to German carmakers was a key factor in their decisions to invest in Hungary, as well as being able to source separators and other components there.

CATL is investing $7.6 billion to build Europe’s largest battery plant in Hungary. This plant and the $2.1 billion BMW factory will both be sited in the city of Debrecen, which is attracting an ecosystem of suppliers, ranging from makers of brakes and battery cathodes to industrial machinery.

Mercedes-Benz is converting its factory in Kecskemet to produce electric cars, while Volkswagen’s (VOWG_p.DE) Audi is making cars and electric motors in Gyor.

Such big business could present a boon for Prime Minister Orban’s government as the country faces its toughest economic environment in more than a decade, with inflation running above 20%, the economy slowing and EU funds in limbo.

Yet the Hungarian EVs project also faces stiff obstacles, according to many of the industry insiders.

One key concern is the huge demands that massive battery plants will place on the electricity grid, which needs to shift away from fossil fuels towards renewables to meet the net-zero emissions targets of much of the auto industry, the people said.

A lack of specialised workers in Hungary to work in battery cell manufacturing could also drag on capacity, they added.

HIPA, the Hungarian Foreign Ministry agency responsible for attracting investments in areas ranging from batteries and cars to logistics, did not respond to Reuters queries about the EV industry.

‘CHINA’S MADE GOOD STEPS’

Hungary’s welcome to Asian battery makers might jar with concerns expressed by Brussels and Berlin about the perils of Europe becoming too dependent on China and other foreign powers, particularly in technologies central to the green transition.

Still, for now, the need to ramp up EV output leaves the European auto industry little choice but to source from Asian players, said Csaba Kilian of Hungary’s automotive association.

“I absolutely agree that European manufacturers should have their own sources … but it’s a competition, and China has made good steps,” he added. “There is a learning curve.”

Europe should have a EV battery manufacturing capacity of 1,200 gigawatt hours (GWh) by 2031 if current plans come to fruition, outstripping expected demand of 875 GWh, Benchmark Mineral Intelligence (BMI) estimates. But of that 1,200 GWh, 44% will be provided by Asian companies with factories in Europe, ahead of homegrown firms on 43% and U.S. pioneer Tesla (TSLA.O) with 13%, according to a Reuters calculation based on BMI data.

The prospects for developing a battery sector in Germany have been set back by record energy there as a result of the loss of Russian gas, according to autos consultants at Boston Consulting Group and Berylls Strategy Advisors.

Hungary offers a comparatively stable energy system bolstered by nuclear energy, as well as high subsidies and Europe’s lowest corporate tax rate of 9%.

The entire battery supply chain has come to the country, said Ilka von Dalwigk, policy manager at the European Battery Alliance, launched by the European Union in 2017 to kick-start a homegrown industry.

“Everything is located there. When we look at the forecast for 2025 and 2030, it looks like it will have one of the largest production capacities in Europe,” she added.

“It might very well be that Hungary is in fact the next big battery production cluster in Europe.”

Asked about concerns about reliance on Asia for technology, an EU official said the bloc – which must approve member state subsidies to investors – had a system in place to cooperate and exchange information on investments from non-EU countries that may affect security.

The European Commission is currently in talks with Hungary over the size of the subsidy the country will offer to CATL for building the Debrecen plant, the official added.

‘SENDING THE WRONG SIGNAL’

For some Western companies, setting up shop in Hungary is a tough decision.

German autos supplier Schaeffler said it was on the verge of setting up its primary electric motor plant in Hungary rather than Germany in August because of the appeal of Hungary’s incentives, but decided on Germany for fear of sending “the wrong signal” to Germans who fear a loss of jobs to overseas.

Other industry players expressed a range of concerns over potential pitfalls for the burgeoning Hungarian auto industry as factories ramped up, including the power grid issue.

Batteries, in particular, are highly energy-intensive parts of EVs to produce, requiring high amounts of power for the drying the materials and machine operation.

Hungary’s sources of energy in 2021 comprised 80% fossil fuels, 14.5% nuclear and 3.6% solar, according to a Reuters calculation of data from the BP Statistical Review of World Energy.

The mix spells trouble for carmakers who will soon need to showcase carbon-free credentials across their supply chains under new German and European legislation.

Hungarian Foreign Minister Peter Szijjarto met senior executives from BMW and auto suppliers including Schaeffler and Knorr-Bremse in Munich last month, ahead of the German carmaker announcing it was beefing up its investment in the country.

Topics discussed included plans to improve logistics infrastructure in Hungary and increasing the amount of renewables energy used for the power grid, according to one of the companies that attended.

When BMW first announced its plan to build its Debrecen plant, in 2018, the government committed to spending around 135 billion forints on improving local infrastructure, according to calculations by the German-Hungarian Chamber of Commerce.

On the battery side, CATL told Reuters it was considering developing solar power with local partners in Hungary.

Despite the risks, Alexander Timmer, a partner at Munich-based consultants Berylls Strategy Advisors who has worked on several autos and battery projects in Hungary, said the country presented an appealing package.

“The combination of cost advantages, state subsidies, and closeness to automakers’ plants makes Hungary increasingly attractive to battery producers, he added.

($1 = 397.54 forints; $1 = 0.9483 euros)

Reporting by Victoria Waldersee in Berlin, Gergely Szakacs in Budapest; Additional reporting by Heekyong Yang, Zhang Yan; Editing by Pravin Char

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Oil resumes slide as weak economy outweighs supply risks

  • Brent, WTI reverse gains, resume slide
  • Oil has been falling for four out of five last weeks
  • Keystone pipeline shut, Russia threatens to cut output

SINGAPORE/LONDON, Dec 12 (Reuters) – Oil prices fell on Monday, deepening a multi-week decline, as a weakening global economy offset supply woes stemming from the closure of a key pipeline supplying the United States and Russian threats of a production cut.

Brent crude futures were down 38 cents, or 0.4%, at $75.72 a barrel by 0900 GMT. U.S. West Texas Intermediate crude was at $70.76 a barrel, down 26 cents, or 0.3%.

Last week, Brent and WTI fell to their lowest since December 2021 amid concerns that a possible global recession will impact oil demand.

China, the world’s biggest crude oil importer, continued to loosen its strict zero-COVID policy, though streets in the capital Beijing remained quiet and many businesses stayed shut over the weekend.

On Monday, queues formed outside fever clinics in the cities of Beijing and Wuhan, where COVID first emerged three years ago.

“Oil markets will likely stay volatile in the near term amid uncertainty over the impact on Russian output from the EU’s ban, headlines on China’s COVID policy, and central bank movements in the U.S. and Europe,” UBS analysts said in a note.

UBS said it believed Brent should recover to above $100 per barrel in the coming months amid supply constraints and rising demand while OPEC+ would keep supply tight.

On Sunday, Canada’s TC Energy (TRP.TO) said it had not yet determined the cause of the Keystone oil pipeline leak last week in the United States. It gave no timeline as to when the pipeline would resume operation.

The 622,000 barrel-per-day Keystone line is a critical artery shipping heavy Canadian crude to U.S. refiners.

Russian President Vladimir Putin said on Friday that Russia could cut production and would refuse to sell oil to any country that imposes a “stupid” price cap on Russian exports.

Saudi Arabia’s energy minister also said on Sunday that price cap measures had had no clear results yet.

“The emergent EU embargo on Russian crude… may add moderate upside energy price risks in the next few months. But supply uncertainty should ease by spring 2023, after the embargo on oil products (on Feb.5) plays out,” Deutsche Bank said in a note.

Reporting by Florence Tan and Emily Chow in Singapore; Editing by Christian Schmollinger, Bradley Perrett and Simon Cameron-Moore

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Kansas residents hold their noses as crews mop up massive U.S. oil spill

WASHINGTON, Kan., Dec 10 (Reuters) – Residents near the site of the worst U.S. oil pipeline leak in a decade took the commotion and smell in stride as cleanup crews labored in near-freezing temperatures, and investigators searched for clues to what caused the spill.

A heavy odor of oil hung in the air as tractor trailers ferried generators, lighting and ground mats to a muddy site on the outskirts of this farming community, where a breach in the Keystone pipeline discovered on Wednesday spewed 14,000 barrels of oil.

Pipeline operator TC Energy (TRP.TO) said on Friday it was evaluating plans to restart the line, which carries 622,000 barrels per day of Canadian oil to U.S. refineries and export hubs.

“We could smell it first thing in the morning; it was bad,” said Washington resident Dana Cecrle, 56. He shrugged off the disruption: “Stuff breaks. Pipelines break, oil trains derail.”

TC Energy did not provide details of the breach or say when a restart on the broken segment could begin. Officials are scheduled on Monday to receive a briefing on the pipeline breach and cleanup, said Washington County’s emergency preparedness coordinator, Randy Hubbard, on Saturday.

OIL FLOWS TO CREEK

Environmental specialists from as far away as Mississippi were helping with the cleanup and federal investigators combed the site to determine what caused the 36-inch (91-cm) pipeline to break.

Washington County, a rural area of about 5,500 people, is about 200 miles (322 km) northwest of Kansas City.

The spill has not threatened the water supply or forced residents to evacuate. Emergency workers installed booms to contain oil that flowed into a creek and that sprayed onto a hillside near a livestock pasture, said Hubbard.

TC Energy aims to restart on Saturday a pipeline segment that sends oil to Illinois, and another portion that brings oil to the major trading hub of Cushing, Oklahoma, on Dec. 20, Bloomberg News reported, citing sources. Reuters has not verified those details.

It was the third spill of several thousand barrels of crude on the 2,687-mile (4,324-km) pipeline since it opened in 2010. A previous Keystone spill had caused the pipeline to remain shut for about two weeks.

“Hell, that’s life,” said 70-year-old Carol Hollingsworth of nearby Hollenberg, Kansas, about the latest spill. “We got to have the oil.”

TC Energy had around 100 workers leading the cleanup and containment efforts, and the U.S. Environmental Protection Agency was providing oversight and monitoring, said Kellen Ashford, an EPA spokesperson.

U.S. regulator Pipeline and Hazardous Materials Administration (PHMSA) said the company shut the pipeline seven minutes after receiving a leak detection alarm.

CRUDE BOTTLENECK

A lengthy shutdown of the pipeline could lead to Canadian crude getting bottlenecked in Alberta, and drive prices at the Hardisty storage hub lower, although price reaction on Friday was muted.

Western Canada Select (WCS), the benchmark Canadian heavy grade, for December delivery last traded at a discount of $27.70 per barrel to the U.S. crude futures benchmark , according to a Calgary-based broker. On Thursday, December WCS traded as low as $33.50 under U.S. crude, before settling at around a $28.45 discount.

“The real impact could come if Keystone faces any (flow) pressure restrictions from PHMSA, even after the pipeline is allowed to resume operations,” said Ryan Saxton, head of oil data at consultants Wood Mackenzie.

Reporting by Erwin Seba in Washington, Kansas, and Nia Williams in Calgary, Alberta;
Additional reporting by Arathy Somasekhar in Houston, Rod Nickel in Winnipeg and Stephanie Kelly in New York
Editing by Gary McWilliams, Stephen Coates and Matthew Lewis

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China’s Xi calls for oil trade in yuan at Gulf summit in Riyadh

  • Xi says summit with Gulf, Arab League is ‘milestone’
  • U.S. wary of growing Chinese influence in Arab world
  • Arabs defy U.S. pressure to limit China ties, cut off Russia
  • Summits showcase Saudi Crown Prince Mohammed as key leader

RIYADH, Dec 9 (Reuters) – President Xi Jinping told Gulf Arab leaders on Friday that China would work to buy oil and gas in yuan, a move that would support Beijing’s goal to establish its currency internationally and weaken the U.S. dollar’s grip on world trade.

Xi was speaking in Saudi Arabia where Crown Prince Mohammed bin Salman hosted two “milestone” Arab summits with the Chinese leader which showcased the powerful prince’s regional heft as he courts partnerships beyond close historic ties with the West.

Top oil exporter Saudi Arabia and economic giant China both sent strong messages during Xi’s visit on “non-interference” at a time when Riyadh’s relationship with Washington has been tested over human rights, energy policy and Russia.

Any move by Saudi Arabia to ditch the dollar in its oil trade would be a seismic political move, which Riyadh had previously threatened in the face of possible U.S. legislation exposing OPEC members to antitrust lawsuits.

China’s growing influence in the Gulf has unnerved the United States. Deepening economic ties were touted during Xi’s visit, where he was greeted with pomp and ceremony and on Friday met with Gulf states and attended a wider summit with leaders of Arab League countries spanning the Gulf, Levant and Africa.

At the start of Friday’s talks, Prince Mohammed heralded a “historic new phase of relations with China”, a sharp contrast with the awkward U.S.-Saudi meetings five months ago when President Joe Biden attended a smaller Arab summit in Riyadh.

Asked about his country’s relations with Washington in light of the warmth shown to Xi, Foreign Minister Prince Faisal bin Farhan Al Saud said Saudi Arabia would continue to work with all its partners. “We don’t see this as a zero sum game,” he said.

“We do not believe in polarisation or in choosing between sides,” the prince told a news conference after the talks.

Though Saudi Arabia and China signed several strategic and economic partnership deals, analysts said relations would remain anchored mostly by energy interests, though Chinese firms have made forays into technology and infrastructure sectors.

“Energy concerns will remain front and centre of relations,” Robert Mogielnicki, senior resident scholar at the Arab Gulf States Institute in Washington, told Reuters.

“The Chinese and Saudi governments will also be looking to support their national champions and other private sector actors to move forward with trade and investment deals. There will be more cooperation on the tech side of things too, prompting familiar concerns from Washington.”

Saudi Arabia agreed a memorandum of understanding with Huawei this week on cloud computing and building high-tech complexes in Saudi cities. The Chinese tech giant has participated in building 5G networks in Gulf states despite U.S. concerns over a possible security risk in using its technology.

NATURAL PARTNERS

Saudi Arabia and its Gulf allies have defied U.S. pressure to limit dealings with China and break with fellow OPEC+ oil producer Russia over its invasion of Ukraine, as they try to navigate a polarised world order with an eye on national economic and security interests.

Riyadh is a top oil supplier to China and the two countries reaffirmed in a joint statement the importance of global market stability and energy collaboration, while striving to boost non-oil trade and enhance cooperation in peaceful nuclear power

Xi said Beijing would continue to import large quantities of oil from Gulf Arab countries and expand imports of liquefied natural gas, adding that their countries were natural partners who would cooperate further in upstream oil and gas development.

China would also “make full use of the Shanghai Petroleum and National Gas Exchange as a platform to carry out yuan settlement of oil and gas trade,” he said.

Beijing has been lobbying for use of its yuan currency in trade instead of the U.S. dollar.

A Saudi source, speaking before Xi’s visit, told Reuters that a decision to sell small amounts of oil in yuan to China could make sense in order to pay Chinese imports directly, but “it is not yet the right time”.

Most of Saudi Arabia’s assets and reserves are in dollars including more than $120 billion of U.S. Treasuries that Riyadh holds, and the Saudi riyal, like other Gulf currencies, is pegged to the dollar.

Earlier, the Chinese leader said his visit heralded a new era in relations, voicing hope the Arab summits would become “milestone events in the history of China-Arab relations”.

Additional reporting by Eduardo Baptista in Beijing, Riham Alkousaa, Ahmad Ghaddar and Lina Najm in Dubai
Writing by Ghaida Ghantous and Dominic Evans
Editing by Mark Heinrich, William Maclean and Mark Potter

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Oil removal effort for Keystone pipeline spill to extend to next week, U.S. EPA says

Dec 9 (Reuters) – The effort to remove oil from the largest crude spill in the United States in nearly a decade will extend into next week, the U.S. Environmental Protection Agency said on Friday, making it likely that the Keystone pipeline shutdown will last for several more days.

TC Energy (TRP.TO) shut the largest oil pipeline to the United States from Canada on Wednesday after it leaked 14,000 barrels of oil into a Kansas creek. It said on Friday it is still determining when it will be able to return the line to service.

The outage on the Keystone, which carries 622,000 barrels of Canadian crude per day (bpd) to various parts of the United States, could affect inventories at the key Cushing, Oklahoma, storage hub and cut crude supplies to two oil refining centers, analysts said. Crews in Kansas continued clean-up efforts on Friday from the breach, the cause of which remained unknown.

“We’re beginning to get a better sense of the clean up efforts that will need to be undertaken in the longer-term,” said Kellen Ashford, spokesperson for the EPA Region 7, which includes Kansas.

TC Energy aims to restart on Saturday a pipeline segment that sends oil to Illinois, and another portion that brings oil to Cushing on Dec. 20, Bloomberg News reported, citing sources. Reuters has not verified those details.

This is the third spill of several thousand barrels of crude on the pipeline since it first opened in 2010. A previous Keystone spill had caused the pipeline to remain shut for about two weeks.

TC Energy remained on site with around 100 workers leading the clean-up and containment efforts, and the EPA was providing oversight and monitoring, Ashford said. TC is responsible for determining the cause of the leak.

A corrective action order from the U.S. Pipeline and Hazardous Materials Administration (PHMSA) to TC on Thursday said the company shut the pipeline down seven minutes after receiving a leak detection alarm. The affected segment, 36 inches (91 cm) in diameter, was Keystone’s Phase 2 extension to Cushing built in 2011.

Washington County, a rural area of about 5,500 people, is about 200 miles (320 km) northwest of Kansas City.

The oil spill has not threatened the local water supply or forced local residents to evacuate, Washington County Emergency Management Coordinator Randy Hubbard told Reuters. Workers quickly set up a containment area to restrict oil that had spilled into a creek from flowing downstream.

“There is no human consumption drinking water that would come out of this,” Hubbard said.

Livestock producers in the area have been notified and have taken their own corrective measure to protect their animals, he added.

The EPA is the main federal agency that oversees inland oil spills. If the EPA finds TC Energy liable for the spill, the company would be responsible for the cost of cleanup and repairing any harm to the environment, as well as potential civil and criminal penalties.

Pipeline operators are typically held accountable for breaches by the EPA through the Clean Water Act (CWA) and the related Oil Pollution Act, among others, according to Zygmunt Plater, an environmental law professor at Boston College Law School.

Those federal acts restrict the discharge of pollutants such as oil into waterways and hold pipeline operators responsible for the costs associated with containment, cleanup and damages from spills.

CRUDE BOTTLENECK

A lengthy shutdown of the pipeline could also lead to Canadian crude getting bottlenecked in Alberta, and drive prices at the Hardisty storage hub lower, although price reaction on Friday was muted.

Western Canada Select (WCS), the benchmark Canadian heavy grade, for December delivery last traded at a discount of $27.70 per barrel to the U.S crude futures benchmark, according to a Calgary-based broker. On Thursday, December WCS traded as low as $33.50 under U.S. crude, before settling at around a $28.45 discount.

PHMSA has to approve the restart of the line. Even once the pipeline starts operating again, the affected area will have to flow at reduced rates pending PHMSA approval.

“The real impact could come if Keystone faces any pressure restrictions from PHMSA, even after the pipeline is allowed to resume operations,” said Ryan Saxton, head of oil data at Wood Mackenzie.

Additional reporting by Arathy Somasekhar, Rod Nickel, Stephanie Kelly and Clark Mindock; Editing by Marguerita Choy

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Twenty oil tankers halted near Istanbul in insurance dispute

  • Backlog unsettling oil and tanker markets
  • Turkey says out of question to take insurance risk
  • Yellen says oil from Kazakhstan should not be targeted
  • Ankara says most of waiting ships are EU vessels

ISTANBUL, Dec 9 (Reuters) – The number of oil tankers waiting in the Black Sea to pass through Istanbul’s Bosphorus Strait on the way to the Mediterranean rose to 20 on Friday, Tribeca shipping agency said, as Turkey held talks to resolve an insurance dispute behind the build-up.

Dismissing pressure from abroad over the lengthening queue, Turkey’s maritime authority said on Thursday it would continue to block oil tankers that lacked the appropriate insurance letters, and it needed time for checks.

The ship backlog is creating growing unease in oil and tanker markets and comes as the G7 and European Union introduce a price cap on Russian oil. Millions of barrels of oil per day move south from Russian ports through Turkey’s Bosphorus and Dardanelles straits into the Mediterranean.

The maritime authority said that in the event of an accident involving a vessel in breach of sanctions it was possible the damage would not be covered by an international oil-spill fund.

“(It) is out of the question for us to take the risk that the insurance company will not meet its indemnification responsibility,” it said, adding that Turkey was continuing talks with other countries and insurance companies.

It said the vast majority of vessels waiting near the straits were EU vessels, with a large part of the oil destined for EU ports – a factor frustrating Ankara’s Western allies.

The G7 group of nations, the EU and Australia have agreed to bar providers of shipping services, such as insurers, from helping to export Russian oil unless it is sold at an enforced low price, or cap, aimed at depriving Moscow of wartime revenue.

However, Turkey has had a separate measure in force since the start of the month requiring vessels to provide proof of insurance covering the duration of their transit through the Bosphorus strait, or when calling at Turkish ports.

KAZAKH OIL

Eight tankers were also waiting for passage through the Dardanelles strait into the Mediterranean, down from nine a day earlier, Tribeca said, making a total of 28 tankers waiting for southbound passage.

Most of the tankers waiting at the Bosphorus are carrying Kazakh oil and Treasury Secretary Janet Yellen said on Thursday the U.S. administration saw no reason that such shipments should be subjected to new procedures.

Washington had no reason to believe Russia was involved in Turkey’s decision to block ship transits, she added.

Turkey has had to balance its good relations with both Russia and Ukraine since Moscow invaded its neighbour in February. It played a key role in a United Nations-backed deal reached in July to free up grain exports from Ukrainian Black Sea ports.

Turkey’s maritime authority said that it was unacceptable to pressure Turkey over what it said were “routine” insurance checks and that it could remove tankers without proper documentation from its waters or require them to furnish new P&I ship insurance letters covering their journeys.

Reporting by Daren Butler, Can Sezer, and Jonathan Saul in London
Editing by Himani Sarkar, Clarence Fernandez, Jonathan Spicer and Frances Kerry

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