Showing posts with label Energy. Show all posts
Showing posts with label Energy. Show all posts

14 January 2019

How Is China Securing Its LNG Needs?


In 2017, China surpassed South Korea to become the world’s second-largest liquefied natural gas (LNG) importer. In a few years, it might overtake Japan. But how is China securing its LNG needs? This is an important question for several reasons. First, when Chinese companies go overseas, they often trigger geopolitical anxiety, so it is worth asking whether Chinese companies are going out more than before; and if so, where and doing what deals? Second, China is the main growth market for LNG, and so Chinese companies can set a tone for the market as a whole; is there a shift in buying behavior or risk? And third, some U.S. project developers worry that the trade war with China will hurt their ability to progress to final investment decision (FID), while others, like Alaska, place their hopes on China; how real are those hopes and concerns?

China’s foray into LNG started in the early 2000s. China National Offshore Oil Corporation (CNOOC) was the first national oil company (NOC) to venture into LNG buying an equity stake in two projects in Indonesia and Australia and contracting to purchase LNG on a long-term basis from those projects (for a full list of the deals used for this analysis, see appendix). From 2006 to 2009, China National Petroleum Corporation (CNPC) and Sinopec joined CNOOC to sign long-term contracts but without acquiring any equity. In 2008 CNOOC also signed the first portfolio deal, where the LNG is not tied to any source but is delivered by a company with multiple options. From 2010 to 2014, the NOCs signed one or two long-term contracts a year, while also acquiring equity stakes in Australia, Russia, Mozambique, and Canada. Other Chinese companies started to sign contracts in 2010, and, from 2015 to 2017, non-NOCs accounted for most of the contracts LNG into China but without buying equity stakes. The NOCs came back to the market for long-term contracts in 2018 but again with no equity positions. In short, there have been a few twists and turns in these 18 years, and while it is not easy to compress this story into a few paragraphs, some clear patterns can be observed in how Chinese companies have gone about securing LNG.

12 January 2019

How Is China Securing Its LNG Needs?


In 2017, China surpassed South Korea to become the world’s second-largest liquefied natural gas (LNG) importer. In a few years, it might overtake Japan. But how is China securing its LNG needs? This is an important question for several reasons. First, when Chinese companies go overseas, they often trigger geopolitical anxiety, so it is worth asking whether Chinese companies are going out more than before; and if so, where and doing what deals? Second, China is the main growth market for LNG, and so Chinese companies can set a tone for the market as a whole; is there a shift in buying behavior or risk? And third, some U.S. project developers worry that the trade war with China will hurt their ability to progress to final investment decision (FID), while others, like Alaska, place their hopes on China; how real are those hopes and concerns?

14 December 2018

Energy Opportunities under the Free and Open Indo-Pacific Vision

Jane Nakano

Energy has emerged as a key element in the economic agenda under the Trump administration’s Free and Open Indo-Pacific strategy, which essentially seeks to marshal a counteroffensive to China-led multi-billion-dollar energy and energy infrastructure outreach in the region. In July 2018, the U.S. administration announced several economic initiatives to “support foundational areas of the future: digital economy, energy, and infrastructure.” In particular, Asia EDGE (Enhancing Development and Growth through Energy) is an initiative that aims to strengthen energy security and promote energy access across the Indo-Pacific by growing regional markets and boosting U.S. energy exports, such as natural gas that is a lower carbon alternative to coal, whose demand is on rise in the region.

5 December 2018

Is Chechnya Finally Going to Control Its Own Oil Reserves—and Thus Its Destiny?

Paul Goble

In one pivotal scene in David Lean’s 1962 film Lawrence of Arabia, Thomas. E. Lawrence asks the British general in Cairo, Sir Edmund Allenby, to provide the Arab revolt with artillery. The general’s political advisor says that if he gives the Arabs artillery, he will have effectively given them independence. In that case, Allenby says, he cannot do it. That dramatized exchange springs to mind after Chechnya’s leader, Ramzan Kadyrov, said in Grozny on October 28 that his republic is on the brink of acquiring a 100 percent stake in a petrochemical extraction company. That state acquisition will crucially allow the Chechens to pump, process and sell oil on their own (RBC, October 28).

15 October 2018

Can Re-Imposition Of US Sanctions On Iran Cause Any Disruption In Oil Trade? – OpEd


With November 4, 2018, the date for re-imposition of U.S. sanctions against Iran drawing closer, uncertainty about how much of global oil supply will be affected is running high. Mixed signals are coming from some of Iran’s biggest oil customers. Analysts fear that uncertainty is likely to linger on even after the sanctions become effective. There is a need to understand the motive behind the US decision.
There is growing consensus that the US decision is based on achieving three key objectives: 1) weakening Iran economically to stop it from becoming a regional power. Both the US and Israel have learnt that an economically strong Iran is the biggest hurdle in maintaining their hegemony in the region, 2) by creating rift between Saudi Arabia and Iran, the US also succeed in selling more arms to Saudi Arabia, which has been brainwashed to an extent where the monarch considers Iran a bigger threat as compared to Israel and 3) the biggest beneficiary of high oil price is the US that has attained the status of largest oil producing country.

According to energy sector analysts, if crude price plunge below US$50/barrel most of the US shale companies will go bankrupt. It is on record that in the past when crude price touched US$147/barrel the number of active rigs rose to around 1,600. When the price plunged to less than US$40/barrel the number of active rigs declined to less than 600.
One of the objectives of western media is to keep the level of uncertainty high by promoting geopolitical crises. By keeping level of uncertainty high, speculators are facilitated and one thing has been proved without any doubt that even the hawkish statements of the US present keeps oil prices volatile.

14 September 2018

The Downside For Oil Is Limited – Analysis

By Nick Cunningham

More than two weeks of nearly uninterrupted price gains for crude oil ended this week, with the rally running out of steam. The question is what happens next? Oil prices posted steep losses just as the bulls were back on the march. WTI briefly topped $70 per barrel in recent days and Brent was flirting with $80. But the rally was kneecapped by a variety of factors, and it could be challenging to break above those key pricing thresholds in the near future. “[A]lthough the timing of the price slide comes as a surprise – Brent dipped well below $76 for a time [on Thursday] – the slide itself does not, as expectations recently have doubtless been too optimistic,” Commerzbank wrote in a note. In fact, to some, the timing was not all that surprising – WTI faced technical resistance at around $70-$71, and having failed to break above that threshold, was forced back down.

4 September 2018

The shale gas challenge

Shashikant Yadav, M.P. Ram Mohan

On August 1, 2018, the Central government approved a far-reaching policy that allows private and government players to explore and exploit unconventional hydrocarbons (including shale gas) in contract areas that were primarily allocated for extracting conventional hydrocarbons. Unlike conventional hydrocarbons that can be sponged out of permeable rocks easily, shale gas is trapped under low permeable rocks. Therefore, a mixture of ‘pressurised water, chemicals, and sand’ (shale fluid) is required to break low permeable rocks in order to unlock the shale gas reserves. The process requires around 5 to 9 million litres of water per extraction activity, posing a daunting challenge to India’s fresh water resources.

1 September 2018

Whither the Oil Market? Headlines and Tariffs and Bears, Oh My…


Today’s oil markets look a lot like New England weather—poised to change in the blink of an eye, or maybe more aptly, on the next set of released data. Earlier this year, the International Energy Agency (IEA) first predicted that U.S. production growth (which continues an impressive expansion despite a recent slowdown) could single-handedly cover increases in global demand. More recently, reacting to a spate of (planned and unplanned) supply curtailments, including impending sanctions and robust economic growth, the storyline changed to one of needing more prompt barrels to avoid a future price spike. The Organization for Petroleum Exporting Countries’ (OPEC) summer meetingproduced an agreement to keep oil markets adequately supplied even as Venezuelan, Nigerian, and Libyan output seemed in peril. Canadian and U.S. supplies were impacted by logistics and infrastructure constraints, and the North Sea dealt with union contract disputes.

17 July 2018

Oil Geopolitics and Iran’s Response

by Amy Myers Jaffe

At first glance, last week’s Vienna Group meeting—that is the Organization of Petroleum Exporting Countries (OPEC) plus non-OPEC producers including Russia—seemed to have resolved some thorny issues. The producer group confidently announced it would increase oil production to stabilize the global oil market. Iran, which had previously threatened to boycott any agreement in protest, appeared to acquiesce to the joint OPEC production increase communique. That may have seemed like a win for the Trump administration, which had hoped to box Iran in to the negotiating table on a host of issues, including conflict resolution in Yemen and Syria, when it cancelled the nuclear deal and reimposed sanctions on Iranian oil exports. Iran had suggested OPEC take a more strident stance on the U.S. policy. Not unexpectedly, U.S. Gulf allies, under pressure from U.S. President Donald Trump’s tweets and back door diplomacy, offered a moderate approach, which will include significant production increases by Saudi Arabia, among others.

14 July 2018

How Much Does OPEC Disagree On Oil Prices?

by Martin Armstrong

After bottoming out at around 40 dollars in June 2017, the price of the Brent barrel has almost doubled since then. The main exporters of crude will be meeting tomorrow in Vienna to discuss their upcoming strategies and price targets, but their starting positions are quite different. Based on analysis by Bloomberg, this infographic reveals that there is a large gap between the barrel prices that each country would find satisfactory for their domestic budgetary needs. Meanwhile, those with more solid extractive industries such as Russia or Kazakhstan would like to increase drilling. Countries where production has been affected by political instabilities such as Libya or Venezuela would prefer to keep export quotas as they are for now.

Can Energy Close America’s Trade Deficit?


Energy has long played a major role in America’s trade deficits. Today, energy is seen differently: as a commodity to be exported, one that can help narrow trade deficits. Yet the hope that energy alone can solve this macroeconomic headache is misplaced. For one, over the last decade the non-energy trade deficit in goods has widened sharply even as the energy trade deficit has disappeared; energy can only do so much without the rest of the economy following. More importantly, the forecasted shifts in the energy trade balance are small compared to what has already happened; if energy has not shrunk the deficit over the last 10 years, it is unlikely to do so in the future. Energy will still matter, of course, but do not expect it to solve this big, non-energy issue.

The Energy and Trade Deficits Delink

28 June 2018

The Revival of Russian Energy Projects in Bulgaria

By: Margarita Assenova

On June 6, the Bulgarian parliament approved a proposal by the ruling coalition to explore possibilities of restarting the Belene nuclear plant project (NPP), a project that, five years ago, was widely recognized as unprofitable and beset by corruption. However, the legislative body rejected the Socialist Party’s demand to fully overturn the parliamentary decision that had suspended the project following an unsuccessful referendum in January 2013 (see EDM, February 5, 2013; Vindobona.org, March 1, 2013). The cabinet will have to present viable options for reopening the Belene NPP, including securing a “strategic” investor and a financing scheme, but without involving any state guarantees, such as long-term electricity purchase contracts or preferential pricing (Nucnet.org, June 7, 2018).

Bringing (solar) power to the peopleBy Adam Kendall and Gillian Pais


About a billion people have no access to electricity. While progress in lessening that figure has been steady, it is still likely to be at least 870 million in 2020.1Expanding the grid is part of the answer to the question of how to bring power to these people, but it is not the only one. Many countries in sub-Saharan Africa and South Asia,2which make up 90 percent of the world’s unelectrified population, are also exploring off-grid solutions, including solar home systems (SHSs). So are countries in the Caribbean and Southeast Asia, which account for most of the remaining unelectrified population. The global market for SHSs has grown 23 percent a year since 2012,3representing more than four million units installed.
Sidebar

What a solar home system does

27 June 2018

*** Perspective On Oil

by President Robert S. Kaplan

U.S. crude oil production is estimated to have grown from 5.1 million barrels per day in May 2008 to approximately 10.6 million barrels per day in May 2018.[ 1], [ 2] As a result of this growth, the U.S. now represents approximately 13 percent of global crude oil production, up from 7 percent 10 years ago. Improvements in shale oil drilling and completion techniques have been a critical element of this growth, with much of the new production occurring in Texas as well as North Dakota, New Mexico, Oklahoma and Colorado.[ 3] While the U.S. continues to be a substantial crude oil importer, the shale boom has allowed our country to substantially reduce the percentage of petroleum product consumption that is supplied by imports.

Lithium and cobalt: A tale of two commodities

By Marcelo Azevedo, Nicolò Campagnol, Toralf Hagenbruch, Ken Hoffman, Ajay Lala, and Oliver Ramsbottom

What does the rise of electric vehicles mean for two critical raw materials that go into their batteries—and for the players in this ecosystem?  The electric-vehicle (EV) revolution is ushering in a golden age for battery raw materials, best reflected by a dramatic increase in price for two key battery commodities, lithium and cobalt, over the past 24 months. In addition, the growing need for energy storage, e-bikes, electrification of tools, and other battery-intense applications is increasing the interest in these commodities (Exhibit 1). 

22 June 2018

Energy for the Common Good

JEFFREY D. SACHS

Aristotle famously contrasted two types of knowledge: “techne” (technical know-how) and “phronesis” (practical wisdom). Scientists and engineers have offered the techne to move rapidly from fossil fuels to zero-carbon energy; now we need the phronesis to redirect our politics and economies accordingly. The climate crisis we now face is a reflection of a broader crisis: a global confusion of means and ends. We continue to use fossil fuels because we can (means), not because they are good for us (ends). This confusion is why Pope Francis and Ecumenical Patriarch Bartholomew are spurring us to think deeply about what is truly good for humanity, and how to attain it. Earlier this month, the pope and patriarch each convened business, scientific, and academic leaders, in Rome and Athens, respectively, to hasten the transition from fossil fuels to safe renewable energy.

12 June 2018

The Future of Nuclear Power in China

MARK HIBBS

China is on course to lead the world in the deployment of nuclear power technology by 2030. Should it succeed, China will assume global leadership in nuclear technology development, industrial capacity, and nuclear energy governance. China is on course to lead the world in the deployment of nuclear power technology by 2030. Should it succeed, China will assume global leadership in nuclear technology development, industrial capacity, and nuclear energy governance. The impacts will be strategic and broad, affecting nuclear safety, nuclear security, nonproliferation, energy production, international trade, and climate mitigation. Especially critical is whether China achieves an industrial-scale transition from current nuclear technologies to advanced systems led by fast neutron reactors that recycle large amounts of plutonium fuel.

6 June 2018

Emerging Market Meltdown Could Undermine Oil Rally – Analysis

By Nick Cunningham

Saudi Arabia and Russia just destroyed the oil price rally, potentially putting an end to all the speculation about what the group might do next. But higher production doesn’t necessarily mean higher oil prices are entirely out of the question, and in fact, the oil market is still faced with a ton of uncertainty. Higher oil production from the OPEC/non-OPEC group would seem to close off the higher-price scenario. But a “complete collapse” of Venezuela’s oil production could still push oil prices up to $100 per barrel, Bob Parker, investment committee member at Quilvest Wealth Management, told CNBC.

31 May 2018

Oil Shock: Entry Point For Deepening Reform – Analysis

By Sanjeev Ahluwalia

The oil shock poses two risks for India. First, the fear that it will increase the current account deficit. Second, it poses a conundrum of navigating conflicting objectives — preserve the market-based retail oil price mechanism whilst graduating the price shock for consumers and containing inflation. The latest oil shock — an increase from $69 last year to $80 per barrel this week — is courtesy the American President, Donald Trump, who unilaterally pulled the United States out of the 2015 deal that Iran had reached with the UN’s Permanent Five (US, UK, Russia, France, China) plus Germany. This spooked the global financial markets, which justifiably fear renewed trade sanctions on Iran, ending five per cent of world production. The nuclear deal had ended sanctions and boosted world supply. Prices declined from $84.2 in 2014-15 to $46.2 in 2015-16. New sanctions may reverse the trend.

30 May 2018

China Will Need American Shale

Anthony Fensom

China’s shale gas production is picking up speed as it seeks to capitalise on the world’s highest estimated shale reserves. However, the communist-ruled nation is far from following in the footsteps of America’s shale boom, with analysts predicting China will miss its 2020 output targets by a wide margin. Nevertheless, China’s progress toward unlocking its shale gas reserves was highlighted by an April 17 report by the consultancy Wood Mackenzie. The report said China’s shale industry reached nearly 600 wells and nine billion cubic meters (bcm) of production in 2017, with output expected to nearly double to seventeen bcm by 2020. In addition, almost 700 new wells are expected to come onstream by the end of the decade from three new projects in the southwestern Sichuan Basin, with total capital investment of $5.5 billion.