By David Shepardson

FARNBOROUGH, England – European airplane manufacturer Airbus and more than a half dozen airlines said on Monday they had signed letters of intent to discuss buying carbon removal credits to offset the emissions from air travel.

Airbus joined by Air Canada, Air France-KLM, EasyJet, International Airlines Group, LATAM Airlines Group, Lufthansa Group and Virgin Atlantic have committed to engage in “negotiations on the possible pre-purchase of verified and durable carbon removal credits starting in 2025.”

The carbon removal credits will be issued by Airbus’ partner 1PointFive – a subsidiary of Occidental Petroleum Corp Low Carbon Ventures business, which plans to build a direct air carbon capture and storage facility in Texas for carbon removal that will be able to remove up to 1 million tons of C02. Construction is expected to begin toward the end of this year and be running by 2024, said Steve Kelly, who heads 1PointFive.

Airbus’ partnership with 1PointFive includes prepurchasing 400,000 tons of carbon removal credits over a four-year period, the companies said.

“These first letters of intent mark a concrete step towards the use of this promising technology for both Airbus’ own decarbonization plan and the aviation sector’s ambition to achieve net-zero carbon emissions by 2050,” Airbus’ Julie Kitcher said.

The airline industry, responsible for nearly 3% of global carbon dioxide emissions, faces significant challenges in meeting ambitious goals to cut emissions. Airline officials argue that carbon capture can be one part of a multi-pronged strategy to cut emissions.

In 2020, United Airlines said it agreed to a multimillion-dollar investment in a project to built a U.S. industrial-sized direct air capture plant with 1PointFive.

The technology has yet to be proven up to scale. And it’s expensive, costing hundreds of dollars to capture just one ton of CO2. Several previous carbon capture and storage (CCS) efforts have failed.

(Reporting by David Shepardson; Editing by Bernadette Baum)

BERLIN – Volkswagen-owned Porsche expects revenue of 38 billion to 39 billion euros ($38.63 billion to $39.64 billion) in 2022 from 33.1 billion in 2021, the sportscar maker said on Monday, despite registering a 5% drop in deliveries in the first half of the year.

Long-term, the brand is targeting 20% or more return on sales, with a goal of 17-18% for 2022, it said, up from 16% in 2021.

Porsche, which its owner Volkswagen plans to list on the stock market by the end of this year, saw a 5% drop in deliveries in the first half of 2022 with China sales down 16% amid coronavirus-induced lockdowns.

Still, Chief Financial Officer Lutz Meschke said the carmaker expects a stronger second half in China, with Chief Executive Oliver Blume adding June and July sales so far were positive.

($1 = 0.9859 euros)

($1 = 0.9838 euros)

(Reporting by Victoria Waldersee, Editing by Miranda Murray)

WASHINGTON -Uber Technologies Inc will pay more than $2 million and waive wait time fees for disabled passengers to settle U.S. allegations that the ride share company had violated the Americans with Disabilities Act, the Department of Justice said on Monday.

As part of a two-year agreement, Uber will waive wait time fees for certified disabled riders and pay $1,738,500 to more than 1,000 riders who complained about the charges and $500,000 to others harmed by the practice, the department said.

Uber will also credit accounts for more than 65,000 eligible riders, it added.

The department sued the company in November after passengers complained that they were charged fees for taking more than two minutes to get into their ride share cars, noting in its announcement Monday that blind passengers may take longer to reach the waiting car or those with walkers or wheelchairs may take longer to get in.

“People with disabilities should not be made to feel like second-class citizens or punished because of their disability,” Assistant Attorney General Kristen Clarke said in a statement, adding that the settlement will send “a strong message that Uber and other ridesharing companies will be held accountable.”

An Uber spokesperson welcomed the settlement and said it would continue “to help everyone move easily around their communities” and keep “working to improve accessibility for all users.”

“It has long been our policy to refund wait time fees for riders with a disability when they alerted us that they were charged,” it said, adding that it had made changes before the lawsuit to have disabled riders’ wait time fees waived automatically when Uber is notified that they were charged.

(Reporting by Susan Heavey; additional reporting by David Shepardson and Nivedita Balu; editing by Paul Grant and Aurora Ellis)

By Tim Hepher and Rajesh Kumar Singh

FARNBOROUGH, England -General Electric Chief Executive Larry Culp said on Monday a new “GE Aerospace” brand for its aviation business pointed to a “wider strategic aperture” that could eventually lead to the industrial giant entering new businesses.

Asked at the Farnborough Airshow if that meant a greater appetite for acquisitions as the conglomerate prepares to split into three, Culp said any changes would be “first and foremost organic, and then and only then inorganic opportunities”.

GE is preparing to split into three public companies by spinning off its healthcare business next year, and combining its power and renewable energy units to be spun off in 2024. GE itself will then become an aviation company, headed by Culp.

The split marks the end of the 130-year-old conglomerate that was once the most valuable U.S. corporation and a global symbol of American business power.

It is also in stark contrast to the path GE pursued in the 1980s and 1990s under Jack Welch, who expanded the company into an industrial behemoth.

On Monday, GE unveiled names for the new corporate trio: GE HealthCare, GE Vernova for its energy portfolio and GE Aerospace for the engine maker, which is currently known as GE Aviation.

“The choice to use Aerospace as our go-forward name is in some respects to make sure everyone understands we are more than what we do in commercial,” Culp told reporters. “It is a wider strategic aperture but it would be premature to talk about this or that area being of particular interest,” he added, though he did draw attention to defence and systems.

Experts say systems and other aerospace technologies are key to the future of airplanes which will see a more seamless integration between powerplants and airframes than in the past.

CHESSBOARD

GE’s main competitor in engines for in-demand narrowbody commercial jet engines and in military jet engines, Pratt & Whitney, is part of the Raytheon Technologies conglomerate that combines a broad slate of aircraft systems.

Culp ruled out mimicking a rival’s structure but said GE’s drastic recent efforts to cut debt had left it able to invest.

“Recall, we’ve taken down the better part of $90 billion of debt. We are really going to set up Aerospace and the other two companies to have balance sheets that will allow them to invest both organically and where appropriate inorganically,” he said.

As part of the preparation for the spin-offs, Culp last month expanded his role to head the aviation unit. Some analysts said the move was directed at clearing up any ambiguity surrounding the unit’s management structure.

John Slattery, who had previously been divisional CEO, was named Chief Commercial Officer with a remit including strategy.

The reorganisation and name change comes as planemakers and their engine suppliers are gearing up for major bets that will define air travel for decades as they ponder the propulsion needed for the next generation of greener medium-haul jets.

“Those are the critical questions that GE Aerospace will need to answer,” Culp said. “John and I are going to spend a ton of time going forward .. focused on that chessboard.”

Asked about clogged aerospace supply chains, Culp said “I don’t think this can be solved overnight … It may take 18 months for everyone to catch up.”

He did not elaborate in detail on recent engine delays at CFM, co-owned by GE and France’s Safran.

(Reporting by Tim Hepher and Rajesh Kumar SinghEditing by Mark Potter)

By Sabrina Valle

GEORGETOWN – For the poor, small South American country of Guyana, there’s no time like the present when it comes to reaping the rewards of its offshore oil jackpot.

With sky-high oil prices, a transition to renewable energy on the horizon and 750,000 citizens desperate for better lives, Guyana is putting its foot on the gas to exploit it vast oil reserves, even if that means sacrificing some longer-term gains.

Already locked into contracts with oil firms that have been criticized for being too one-sided, Guyana had hopes of setting up a state-run oil company to manage the next development phase and conduct its own seismic surveys of unexplored fields – all with the aim of securing the best possible return.

But those plans have been shelved as the government faces up to the reality that Guyana doesn’t have the skills or resources to pull them off quickly, and is banking on speed over certainty instead, senior officials told Reuters.

“We don’t have the money or the capability,” said Vice-President Bharrat Jagdeo, speaking for the first time about the decision to drop the state oil firm plans. “A model in which the government puts in money and operates the asset is off the table.”

In a series of conversations with Reuters, Jagdeo also said the recent move to ditch the idea of Guyana doing its own surveys of unexplored blocks to attract higher bids from oil companies was driven by time and capacity too.

“We want to accelerate exploration so we can develop the economy as fast as possible,” said Jagdeo, who has previously served as president and is arguably the country’s most influential politician. “We will probably get less, but we might be able to get faster development.”

Since its first discovery back in 2015, a consortium led by U.S. oil major Exxon Mobil, along with partners Hess Corp and China’s CNOOC, has found about 11 billion barrels of oil and gas in a vast block covering 6.6 million acres about 120 miles (190 km) off the coast.

Based on current expansion plans, the group expects to pump 1.2 million barrels of oil per day from its holdings in 2027, putting Guyana ahead of neighboring Venezuela in terms of output, as well as every oil producer in Africa, bar Nigeria.

It would also give Guyana the highest oil output per capita in the world, ahead of wealthy Gulf states such as Kuwait, Qatar and Saudi Arabia.

‘AVOID THE OIL CURSE’

While Exxon pumped its first oil from Guyana in 2019 and is ramping up output, the government that came to power nearly two years ago with a wafer thin majority in parliament is under pressure to accelerate economic development.

Production sharing agreements signed by the previous administration in 2016 split the profits from the oil 50/50 between the Exxon group and Guyana, but 75% of the revenue goes first to cover the oil companies’ costs.

That leaves Guyana with just 12.5% of the production plus a 2% royalty payment. Its take will increase as and when the development costs tail off – which could be several years away.

The split is not that different from deals in African countries, for example, which had no prior oil industry or oil legislation, according to Theodore Kahn, a senior analyst at security consultancy Control Risks.

But that’s no solace to residents of the capital Georgetown, still waiting for the oil to improve their lives.

“The deal is unfair from the start,” said Michael James, a fruit vendor in Georgetown.

His nephew, a cab driver, earns a living ferrying oil executives to meetings, he said, but the rest of his family struggles from a lack of affordable housing, healthcare or education.

“The oil companies are making all this money, the government is getting paid, but I don’t see much difference in my life,” said James.

This year will be the first time the government uses oil proceeds to fund new schools, roads and a power plant. But it will operate at a deficit of about $470 million in 2022 – a decision the International Monetary Fund has warned against.

“We want to avoid the oil curse and build a resilient economy that brings prosperity to all,” Guyana President Mohamed Irfaan Ali told Reuters in a separate interview. “But as any developing country, we have many challenges.”

GRAPHIC: Exxon accelerates oil production in Guyana https://graphics.reuters.com/GUYANA-OIL/zdpxobxmevx/chart.png

GUYANA’S TALLEST BUILDING

That’s why Guyana is keen to kick-start exploration and production in untapped offshore blocks outside Exxon’s domain – potentially with better terms. The shift to renewables and the drive to slash fossil-fuel emissions is also focusing minds.

“It is important in the context of net zero to have reserves explored, discovered, proven and developed as quickly as possible,” Vice-President Jagdeo said.

However, Guyana has never held an auction of drilling rights and lacks the skills to put one together without an outside firm to run the process, he said.

The current aim is to start offering new blocks in September this year. Setting up a state-oil firm, or carrying out surveys, would have pushed back the timeline, officials said.

An alternative to an auction that is still being considered would be to choose an outside partner to fund and operate a company in which the Guyanese government has a stake, Jagdeo said.

Exxon’s more than 30 exploration successes to date have attracted several offers from other companies to invest in the unexplored areas, he said, declining to list examples.

“We licensed the blocks under a first come, first serve basis. Now, it is a totally different situation,” he said.

Earlier this year, Jagdeo told Reuters that Guyana was in talks with Middle Eastern companies about a potential partnership.

A delegation of about 40 representatives from Saudi Arabia was in Georgetown last week for an investment conference and the Gulf kingdom’s state-run oil giant Saudi Aramco was awarded a one-year contract in September to market Guyana’s oil.

Two candidates for additional contracts are Qatar Energy and Abu Dhabi’s National Oil Company, said Arthur Deakin, a co-director at Americas Market Intelligence consulting firm. The companies did not immediately reply to requests for comment.

Signs of Guyana’s new-found wealth are springing up in the seaside capital. A new 12-storey hotel built by local group Pegasus is due to open soon – and it’s now the tallest building in a former British colony that has long depended on agricultural crops such as sugar, rice and coconuts.

More hotels will follow, though the capital is still plagued by power blackouts and telecommunications are patchy.

Officials have agreed for Exxon to build a 227 km (141 mile) pipeline to bring natural gas ashore to fuel a new power plant for the capital. Exxon will be able to deduct the cost of the project from the oil revenue.

Jagdeo, who has criticized previous leaders for being unprepared for negotiations with the Exxon team, defended the decision saying the U.S. company was best suited to deliver the pipeline in the time needed.

The new $100 million power plant will slash the cost of electricity and provide a more reliable supply in a country that has long been wholly reliant on imported fuel, though the date it is due to come online has been pushed back a year to 2025.

MORE TO COME

Offshore, Exxon and its partners have grand plans. More than 300 workers are aboard the first two of what could be as many as 10 floating production vessels. Taller than the new hotel in Georgetown, the vessels cost about $2 billion each and come with living quarters, gyms, dining and entertainment areas.

Guyana’s non-oil economy will grow a healthy 7.7% this year, business consultants Ernst & Young Services estimate, though that’s far behind the 47.5% growth it expects for Guyana’s gross domestic product including oil.

The consortium was pumping 120,000 barrels of oil per day (bpd) at the start of 2022 and plans to hit 360,000 by the end of the year. It is preparing a third vessel that will add 250,000 bpd by late 2023 – six months ahead of schedule – and has floated plans to spend $10 billion to develop a fourth offshore area with another vessel.

Hess estimates that production from the four vessels will break even with oil priced at $25 to $35 per barrel. Brent crude spiked to $139 a barrel shortly after Russia’s invasion of Ukraine and is currently hovering around $100.

Combined, the four vessels should produce about 800,000 bpd by 2025 – more than the annual output of Venezuela, which has the world’s largest oil reserves. The group aims to have six vessels delivering 1.2 million bpd in 2027.

Alistair Routledge, Exxon’s most senior executive in Guyana, has said seven of up to 10 oil platforms are now confirmed. That could nearly double the $30 billion budget Exxon, Hess and CNOOC have agreed for the first four vessels and other infrastructure.

John Hess, chief executive of Hess, said last month he thinks there are many more billion barrels of oil equivalent off Guyana – on top of the 11 billion estimated so far.

“We’re in the early innings of this,” he said.

(Reporting by Sabrina Valle; Editing by Gary McWilliams and David Clarke)