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The Race for Latin American Oil

Good morning; here's what the Oilman has for you today:
Race Is On for Latin American Oil
Exxon’s Low-Carbon Business Bet
Tweet of the Day

Race Is On for Latin American Oil
Refiners across the United States are bracing up for a race that promises to be highly contested.
Now that OPEC+ has cut output further, refiners everywhere are turning their attention to Latin America.
Supply is limited.
And driving season is just around the corner.
All the ingredients of a good drama series.
More oil supply maps are getting redrawn. Could it be for good?
Traditionally, Latin American oil went north to the Gulf Coast refineries. Middle Eastern oil, on the other hand, traveled mainly east.
But that was then. Now, Asian refiners are buying oil from everywhere, including Latin America.
You could call it encroaching on traditional U.S. supply turf, and you won’t be wrong.
But the most you’d get in response would be, “So?”
California relies on Heavy Crude Imported from the Rainforests of South America. This happens because State Regulators slow walk in State projects. Well, now China will be purchasing some of this Rainforest Crude to run in their new heavy crude refinery.
— Jeff Cooper (@JeffCoo00277838)
12:07 AM • Apr 3, 2023
This means that some of these changes are here to stay: China is home to most of the world’s new refining capacity, and it needs the sour crudes of Latin America.
But Gulf Coast refiners need them, too, and they need them urgently.
Sure, driving season this year could turn out weak like last year’s, but who’d risk betting on that?
It would be like betting on another super warm winter.
Because current inflationary pressures weren’t enough…
Now we’re getting a new one in the form of Latin American oil. U.S. refineries need that crude. Venezuela and Canada are not producing enough to replace everything.
What happens when the supply of a commodity is limited and demand exceeds it?
That’s right: inflation.
Just when you try to fix it from one end, it grins at you from a whole new direction.

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Exxon’s Low-Carbon Business Bet
Exxon plans to build out its low-carbon business over the next decade. Exxon’s goal? Deliver a greater share of profits than its traditional work in oil and gas.

CEO Darren Woods delivered the news during a meeting with investors.
Exxon’s share price only dipped a little that day…so the news was well received…?
Away with the boom-bust cycle
"This business is going to look quite a bit different than the base business of ExxonMobil. It is going to have a much more stable, or less cyclical, profile."
The above comes from Exxon’s head of low-carbon business solutions.
The business unit is just a toddler at two years, but ambitions run hot like a startup’s.
For a change, these ambitions are grounded in reality: the cyclical nature of the oil and gas prices. Exxon wants to make itself less vulnerable to the ups-and-downs of the industry.
It’s good for the company. It’s good for investors...
Except the activist ones, but you can’t make everyone happy.
But having great ambitions is one thing.
Turning them into reality will be a bit harder, like that’s a surprise.
The magic formula: subsidies, regulation, and bringing costs down
Unlike its peers, Exxon is not rushing into wind and solar. It’s focusing on carbon capture, biofuels, and hydrogen.
This could become a $ 6.5 trillion market by 2050, Exxon believes.
As long as the government and regulators cooperate.
The administration has been generous, releasing $2.5 billion in federal funding for carbon capture projects.
Regulators are likely to sync with the administration because, well, it’s the boss.
Which leaves the question of bringing costs down.
That’s going to take time, but Exxon seems ready – it’s spending $10 billion on its low-carbon operations over the next four years.

Around the Global Patch
🇨🇴 Problem: Lots of oil spills in Colombia.
🇨🇳 Trafigura & China: all in on metals.
🇧🇷 Exxon gives up on Brazilian exploration.

Tweet of the Day
April 5th, 1933 - Executive Order 6102
He who doesn't understand history is doomed to repeat it.
— Dylan LeClair 🟠(@DylanLeClair_)
5:09 PM • Apr 5, 2023

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