Jul 2023

Big Oil Continues To Be Pushed Toward Greener Endeavors (31 July 2023): By Irina Slav - Last year, Big Oil made record profits that got stuck in the throats of governments, activist organizations, and international bodies such as the UN and the IEA. Yet those same governments practically encouraged these profits by subsidizing fuels to avoid even higher inflation and all the problems that such a development would have produced. In 2022, with demand for energy roaring back after the pandemic and Russia’s invasion of Ukraine, the consequent gas supply squeeze, and fears of a similar oil squeeze, the target that Big Oil had painted on its back temporarily disappeared. Energy security temporarily became more important than decarbonization. That era is over, according to some analysts. Now, the pressure on Big Oil to decarbonize is going to increase. ... (Source: Oil Price)

How Smart Money Is Playing The $700 Billion EV Boom (30 July 2023): By Tom Kool - China is the “800-pound gorilla” of global EV supplies, and it dominates this market in every way, including sales. Last year, China’s exports of EVs increased 131.8% YoY to some 680,000 units, based on official data. In the first half of 2023, the Chinese sold 2,093,000 EVs. Last year’s and this year’s global EV markets are breaking all kinds of records, but China is the clear frontrunner—by miles—accounting for around 60% of global electric car sales, according to the International Energy Agency (IEA). More than half of the EVs on the roads today, are in China, and it’s already exceeded its 2025 target for new energy vehicles. In Europe, the second largest market, EV sales rose by over 15% in 2022, while sales in the United States – the third largest market – increased 55% in 2022, reaching a global share of 8%. ... (Source: Oil Price)

White House Looks To Speed Up Clean Energy Permits (28 July 2023): By Julianne Geiger - The White House’s Council on Environmental Quality released a proposal on Friday that would change the way clean energy projects are reviewed for their impact on the environment. The government’s goal: to speed up the process. The proposal is geared toward changing the National Environmental Policy Act—or NEPA—regulations by lumping environmental reviews of multiple projects together instead of reviewing them one at a time. The proposal would also see federal agencies the ability to exclude even more project categories that would not need to be reviewed, and would limit environmental reviews that federal agencies have determined to have a significant and long-term impact. ... (Source: Oil Price)

Oil Production Cuts Are Taking Their Toll On Saudi Arabia’s Economy (26 July 2023): By Tsvetana Paraskova - Saudi Arabia’s economy is set to markedly slow down this year from last year’s 8.7% `growth due to the oil production cuts the world’s top crude exporter is implementing in a bid to “stabilize the market.” The Kingdom saw its economic growth forecast for 2023 slashed by the most among major economies in the World Economic Outlook Update by the International Monetary Fund (IMF) this week. Significantly lower Saudi GDP growth will also weigh on the regional economic growth in the Middle East and Central Asia region this year, the IMF said. While the Saudi growth outlook for 2023 was cut by 1.2 percentage points from the April outlook by the IMF, Russia’s economic growth estimate was upgraded. ... (Source: Oil Price)

Asian Refiners Pour Billions Into ‘Transition’ Petrochemicals (25 July 2023): By Irina Slav - The idea that the energy transition to an energy system dominated by wind and solar power appears to be at odds with the idea of an oil and gas refining industry. Yet this is a superficial contradiction: wind and solar cannot exist without oil and gas refining. Now, Chinese refiners are taking advantage of this fact. Reuters reported this week that petrochemicals producers in the Asian nation were investing tens of billions to expand their production capabilities for high-end products used in the wind and solar industries. Private and state-owned refiners alike were in a rush to position themselves as suppliers of things like carbon fiber for wind turbine blades, polyolefine elastomers for solar panels, and polyethylene for lithium-ion batteries. ... (Source: Oil Price)

Escalating Geopolitical Tensions Begin To Chip Away At Globalization (24 July 2023): By Kurt Cobb - The most salient fact about natural resources such as minerals and fertile soil is that they are unevenly distributed around the world. That means some countries have far more than they need and others are desperately dependent on imports. Some writers think that trade between nations of resources and practically everything else leads to an interdependence that makes war much more costly and thus less likely. Others believe that the many causes of war—for example, a desire to dominate, fear of being attacked (leading to pre-emptive war), ethnic rivalries and grievances, and the desire for direct control of resources—often negate concerns that the cost of war will exceed its benefits. After the relative quiet of the post-Cold War era during which the world's economies integrated into one global market, major powers and their leaders are again weighing the two arguments. Russia, of course, decided that its fear of being surrounded by NATO-allied countries outweighed the possible economic consequences of war (though it's not clear that the Russian government realized the far-reaching effects its war with Ukraine would have on its trade). ... (Source: Oil Price)

NASA's Solid-State Battery Breakthrough Could Transform Air Travel (23 July 2023): By Haley Zaremba - NASA may have just found a way to change the future of the aeronautics industry. Researchers at NASA’s Solid-state Architecture Batteries for Enhanced Rechargeability and Safety (SABERS) have successfully created a solid-state battery technically advanced enough to efficiently power an aircraft. Finding a way to make air travel greener has been a critical point of interest for the global path to decarbonization, as well as for the economic wellbeing of the industry in a future where fuel prices will likely continue to increase while policy instruments such as carbon taxes become more commonplace. The transportation sector is one of the world’s biggest contributors to climate change, producing almost a quarter of total energy-related carbon emissions worldwide – and air travel is one of the biggest offenders. On average, airplanes emit approximately 100 times more carbon dioxide per hour than a shared bus or train ride. Altogether, aviation’s annual emissions are higher than most entire countries, at 1 billion tons of carbon dioxide per year. And the combustion of jet fuel doesn’t just emit carbon, it also produces “nitrogen oxides, soot, water vapor and sulfate aerosols, all of which interact with the atmosphere and have an effect on the climate in different ways and at different time scales.” ... (Source: Oil Price)

Queensland's $62 Billion Green Energy SuperGrid Gambit (22 July 2023): By Felicity Bradstock - Australia, the source of much of Asia’s coal supply, is expanding its energy interests with high hopes for a range of major renewable energy projects. The government has already approved several wind and solar power operations and expects Australia to become a major green hydrogen hub in the next decade. And now the state of Queensland will become home to a SuperGrid, powered by renewables. Despite continuing to rely heavily on revenues from fossil fuels, Australia has announced a range of ambitious climate pledges. In 2022, the government announced the target of generating 80 percent of its electricity from renewable energy by 2035. It also expects to end its reliance on coal generation for power by this time. Australia hopes to achieve net-zero caron emissions by 2050, cutting its methane emissions by at least 30 percent by 2030. ... (Source: Oil Price)

ExxonMobil Makes Major Move Into Carbon Capture With $4.9 Billion Acquisition (19 July 2023): By David Messler - ExxonMobil (NYSE:XOM) made a splash in the Carbon Capture and Underground Storage-CCUS business last week with news of its $4.9 bn acquisition of Denbury Resources (NYSE:DEN). XOM had $32 bn kicking around on its balance sheet, and it was itching to put some of this cash to work. The much-rumored tie-up between XOM and Pioneer Natural Resources (NYSE:PXD) had not materialized (discussed in an OilPrice article here), so XOM moved to their next priority. Denbury will be folded into XOM’s existing Low Carbon Solutions business and provide some of the first real assets to be deployed by the company in this effort. Darren Woods, CEO of XOM, commented in the release. “Acquiring Denbury reflects our determination to profitably grow our Low Carbon Solutions business by serving a range of hard-to-decarbonize industries with a comprehensive carbon capture and sequestration offering.” ... (Source: Oil Price)

Uncertainty In Oil Markets As Fundamentals Counter Economic Concerns (19 July 2023): By Tsvetana Paraskova - Oil prices dropped in Asian trading early on Wednesday before bouncing back slightly as market participants continue to weigh tightening supply and China’s fresh stimulus pledge against concerns of slowing developed economies amid rate hikes. In Asian trade on Wednesday, the U.S. benchmark WTI Crude was down by 0.13% to $75.65. The international benchmark, Brent Crude, recovered its early losses and was up 0.05% to $79.68. Concerns about the U.S. and European economies, coupled with the lower-than-expected Chinese growth in the second quarter, continue to put downward pressure on prices, although the American Petroleum Institute (API) estimated late on Tuesday a small draw of 797,000 barrels to U.S. crude oil inventories. U.S. gasoline inventories are also estimated to have fallen last week, per API data. If confirmed by the official EIA inventory report later on Wednesday, draws could support oil prices in the latter part of this week. ... (Source: Oil Price)

Why TotalEnergies’ $27 Billion Deal With Iraq Is A Gamechanger (17 July 2023): By Simon Watkins - The long-delayed US$27 billion four-pronged megadeal between France’s TotalEnergies and the Federal Government of Iraq has received the final go-ahead from both sides and is due to start within the next four weeks. The huge deal is crucial in enabling Iraq to increase its oil production from around 4.5 million barrels per day (bpd) to perhaps 13 million bpd within five years. It is also critical to Iraq’s ability to end its dependence on Iran for gas imports and electricity for its power grid. For the West, the deal is crucial is securing access to Iraq’s huge, underdeveloped oil and gas reserves as part of its strategy to find new sources of each to compensate for lost supplies from Russia. It is also vital in reasserting a stake in the central Middle East to counteract the increasing influence of China and Russia there, as analysed in my new book on the new global oil market order. In short, this four-pronged deal with TotalEnergies is a very big thing indeed, which is why all parties involved have pulled out all the stops to either get it across the line or stop it in its tracks, depending on which side they are on. ... (Source: Oil Price)

Gas Flaring: A Dirty Habit The Energy Industry Just Can’t Kick (16 July 2023): By Felicity Bradstock - Despite mounting pressure from international organisations and governments worldwide to reduce carbon emissions, a large quantity of oil and gas companies continue to carry out routine gas flaring practices. While some have curbed flaring through shifting practices to more environmentally friendly alternatives, others are failing to seek a different solution. And without strict regulations to curb the practice, the situation is unlikely to change. Gas flaring is when natural gas is burned in oil production operations. This activity has long been practised for a number of reasons. For example, it is cheaper to flare waste gas than to recycle it. Companies looking to stop the practice would have to capture, transport, process, and sell the gas, which is not viewed as financially viable. While gas flaring is wasteful, it is relatively safe, making it the preferred choice for many oil companies. The practice mainly continues due to a lack of specific regulations to curb it. On average, around 140 billion cubic meters (bcm) of gas is flared every year. ... (Source: Oil Price)

Pemex Sinks Deeper Into Junk: Fitch (14 July 2023): By Julianne Geiger - Fitch Ratings has downgraded Petroleos Mexicanos—or Pemex—squarely into junk territory after several accidents and "weak operating performance". Fitch also lowered its ESG score after those accidents, which included an explosion at a natural gas platform that ended with fatalities and damages to critical infrastructure and assets, to reflect "the environmental and social impact" of those events. Fitch slammed the company's safety record, which it said would prevent Pemex from securing financing from banks and investors. Pemex is still more than $100 billion in debt. Fitch rates Pemex as B+ (from BB-) for its Long Term Issuer Default Rating, and ccc- for Standalone Credit Profile. Fitch has also placed the ratings on Rating Watch Negative (RWN). "The RWN reflects concern about the Mexican government's ability and willingness to materially improve the company's liquidity position and capital structure in the next two years without concessions from creditors," Fitch's Friday commentary reads. ... (Source: Oil Price)

Tesla Looks To Build Major EV Factory In India (13 July 2023): By Charles Kennedy - Tesla has launched talks with the Indian government for the construction of an EV factory in the country with an annual production capacity of half a million vehicles. The Times of India reported that the starting price of the cars produced at the future facility will be around $24,400. “Tesla has come to us with an ambitious plan, and we are confident that the movement will be positive this time around especially as it involves both local manufacturing and exports,” the report cited an unnamed government official as saying. Plans also include using the subcontinent as an export hub for the whole Indo-Pacific region, the source also told the Times of India. Last month, Reuters reported that the EV maker was planning a large-scale investment in India despite past setbacks in its negotiations with the Modi government. The report quoted Tesla’s chief executive Elon Musk as saying that "He (Modi) really cares about India because he's pushing us to make significant investments in India, which is something we intend to do." ... (Source: Oil Price)

Big Oil's Radical Proposal: Curtail Consumption, Not Production (10 July 2023): By Irina Slav - Last year, in the middle of an energy crunch, European governments called on their citizens to consume less energy. They also lashed out at Big Oil for making billions from the squeeze. Now, Big Oil is the one calling for a reduction in energy consumption. Essentially, supermajors have suggested that people should use less of their products. But they don't want to slash production. The seemingly paradoxical message came out earlier this week from a conference in Vienna, where OPEC leaders met with their Big Oil counterparts from BP, Shell, and other oil companies to discuss the future of global energy. As might have been expected in this day and age, the message to come out of the gathering was that everyone is committed to a net-zero world in the future but that right now, everyone was committed to ensuring there is enough energy for those who need it, regardless of the source. ... (Source: Oil Price)

Platform Fire Forces Pemex To Shut In 700,000 Barrels Of Oil (10 July 2023): By Charles Kennedy - Fire on an offshore platform operated by Mexico’s Pemex has led to the shut-in of 700,000 barrels of oil, Reuters has reported, citing the chief executive of the company, Octavio Romero. The fire began on Friday at the Nohoch-A platform that is located in the Bay of Campeche. Six workers were injured, two of them fatally, and one is still missing, according to reports from Reuters and MarketWatch. On Friday, CEO Octavio Romero reported that fireboats had come quickly and prevented the fire from spreading to other facilities in the area: Pemex operates five platforms in the Cantarell field. At the time, Romero estimated potential losses at several thousand barrels of oil equivalent, per a release posted on the Pemex website. This is not the first fire to break out on a Pemex platform. Two years ago, during maintenance season, the company had a fire erupt in an offshore gas-processing plant in the Bay of Campeche. The fire killed five and shut in some 400,000 barrels daily in production. ... (Source: Oil Price)

Welcome To Arkadag: Turkmenistan's Controversial Smart City (8 July 2023): By Eurasianet - The opening of Turkmenistan’s newest city, Arkadag, was performed with the requisite fanfare on June 29. As state media has tirelessly reminded the public, this roughly $5 billion-plus bauble is a “smart city” in which life will be regulated by digital and green technologies, whatever that might mean. The real attitude of the Turkmen authorities to information technology was best illustrated, however, by how internet speeds slowed drastically in the days ahead of this event. As RFE/RL’s Turkmen service reported on July 1, connections were so slow that it became impossible to use censorship-circumventing VPN services. The outlet speculates that the government was eager to limit the dissemination of unfavorable coverage ahead of the bash. ... (Source: Oil Price)

Greater Tortue Ahmeyim natural gas project reaches 90% completion (4 July 2023): World Oil Staff - As the first phase of the Greater Tortue Ahmeyim (GTA) gas project reaches 90% completion, and first gas targeted for the end of fourth-quarter of 2023, Mauritania and Senegal are already looking ahead to the next stage, which is expected to commence between 2024 and 2025. According to Lehbib Khroumbaly, Advisor on Upstream Sector at the Ministry of Petroleum, Energy, and Mines of Mauritania, the Ministry plans to start phase 2 in 2025, “and we expect total completion in 2027,” he told Energy Capital & Power in an exclusive interview. GTA is located 120 km offshore at a water depth of 2850 meters, making it one of the deepest subsea projects in Africa. Phase 1, currently under development, will export gas to a floating production storage and offloading unit (FPSO) located approximately 40 km offshore, where gas will be processed and liquids separated before being exported to floating LNG facilities situated 10 km offshore. It is expected to produce around 2.3 million tons of LNG per year once operations commence. ... (Source: World Oil)