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By David Gaffen, Editor, Energy Markets

Hello Power Up readers! There’s a lot of back-and-forth right now about the trajectory of oil and the outlook for supply, but first we’ve got to start with an exclusive out of Mexico…  

Today’s top headlines:

• OPEC oil output rises for second month on Nigeria, Iran
• China’s power investments may hit $13.7 trln by 2060
• South Africa gives go-ahead for TotalEnergies offshore drilling

That’s the Pemex logo in Mexico City. REUTERS/Raquel Cunha

Mexico’s state run oil company Pemex and giant merchant Vitol have been at odds for about three years, but may have finally reached détente. Pemex will get more than $30 million from Vitol after a graft scandal that had kept the two from dealing with each other, as Adriana Barrera and Stefanie Eschenbacher report here. Vitol is the world’s largest independent commodities trader – and last week Reuters reported that Pemex and Vitol are starting to trade with each other again.   

Vitol in 2020 acknowledged in a deal with the U.S. Department of Justice that it had paid kickbacks to win business with Pemex as well as state companies in Brazil and Ecuador.  

The settlement was signed in April, but it took several weeks for the process to get ironed out, and since then, according to our sources, Pemex has now bought at least eight cargoes from Vitol, resuming its importance as a trading partner for fuel. Mexican President Andres Manuel Lopez Obrador had previously said Pemex would only resume dealing with Vitol if they had adequate compensation and found out who was involved in the graft scandal.  

Those are high-voltage power lines, electricity pylons and wind turbines near Pedrola, Spain. It’s a nicely rendered shot. 

The European Union is considering scrapping a big part of reforms to its electricity market – due to a deadlock between France and Germany over state aid for power plants, as Kate Abnett and Julia Payne report here.  

The two largest EU economies disagree over whether the reforms would give some countries a competitive edge over others. The plan would have allowed governments to offer state-backed, fixed-price power contracts to existing power plants and then collect excess revenues generated by these contracts and spend it on subsidising industries. France wanted to apply those subsidies to its large nuclear power fleet, but Germany is worried about advantaging the French over themselves. 

A document seen by Reuters suggests that negotiations have turned – so that such revenues could be limited, or the EU stepping in as well, or scrapping the rules outright.

That’s a big COP28 at the Changemaker Majlis, a one-day CEO-level workshop focused on climate action in the United Arab Emirates. Reuters/Amr Alfiky

Major oil and gas companies chatted it up with heavy industry companies over the weekend in the United Arab Emirates to try to commit to cut carbon emissions ahead of the United Nations climate summit that begins at the end of November. This year’s COP28 summit has been a source of controversy, as the COP28 president is the UAE’s Sultan al-Jaber, a giant oil-producing nation, as Yousef Saba and Maha El Dahan report here.  

The summit brought together oil and gas with companies in the cement and steel industries, which are massive producers of carbon emissions due to the processes necessary to create those materials. “If the oil and gas industry signs up to decarbonization agreements and methane abatement that is a huge contribution to the debate,” said Adnan Amin, the CEO of COP28. 

We hardly knew ye, Bernard Looney. BP says it wants to stay the course, but we’ll see. Reuters/Daniel Kramer

BP’s interim CEO Murray Auchincloss said on Monday that the energy company’s strategy remains on track following the abrupt resignation of Bernard Looney last month, as Reuters reports here. Looney was relieved of his duties in connection with not disclosing certain relationships, and he had been central to the oil major’s aims to shift to cleaner energy production.  

However, other oil companies have shifted in recent months, edging away from plans to increase lower-carbon fuels due to the ongoing demand for oil and gas and from investor pressure to keep returns higher. BP scaled back its energy transition strategy earlier this year, but is among the only ones that still plans to cut oil and gas output by 2030 by 25%.

“We laid out an update to the strategy in February, seven months ago. That’s a strategy that’s endorsed by the management team and endorsed by the board, one person leaving does not change the strategy,” Auchincloss said, speaking in Abu Dhabi. 

“Tariffs are not a good answer to the current challenges in the European solar industry.”  

Gunter Erfurt of industry group SolarPower Europe, as the EU tries to reduce its reliance on China for solar installation products. 

Pakistan refiner Cnergyico has imported the country’s first private-sector shipment of Russian crude oil, as Ariba Shahid reports here, taking advantage of discounts on Moscow’s oil exports. Russia has altered its customer base after the European markets banned Russian crude, making China and India now its biggest buyers. Pakistan’s government imported a cargo in June, while this is the first time a private buyer has bought Russian oil.  

Cnergyico used single point mooring that can accommodate deep-draft tankers to buy the Russian oil. The shipment “marks an important milestone for the company and for the country as well,” a spokesman said.  

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