The energy crisis in Europe will worsen this winter


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Geopolitics ExxonMobil and Qatar Petroleum are several weeks away from a resumption of exploratory drilling off Cyprus, while the French Total SA and the Italian Eni should resume drilling in the same area in the first half of 2022. This update of the Drilling from the Cypriot government prompted a retaliatory statement. of Turkey, with Ankara – which disputes the waters in the area that straddle its continental shelf and fall off Turkish Cyprus – saying it would not be dissuaded from drilling nearby in the disputed waters. Such statements will make investors in these Western drillers nervous, given an earlier incident in 2018 when Turkish warships prevented Eni’s drillship from exploring. After a historically shocking detente between Israel and the United Arab Emirates last year and the signing of major energy deals soon after, one of the biggest Israeli-UAE deals is now in question. This week, Israel’s Energy Minister called for the cancellation of his country’s oil pipeline deal with UAE investors, citing environmental concerns. This reflects the unease, especially within Israel, and the political backlash is now being felt, which in turn could upend diplomatic progress. In retaliation for Poland’s hosting of “dissidents”, Belarus restricted flows via a Russian pipeline to Poland. There is also speculation that Belarus is “weaponizing” migrants positioned at the border who try to enter …

Geopolitics

ExxonMobil and Qatar Petroleum are several weeks away from a resumption of exploratory drilling off Cyprus, while the French Total SA and the Italian Eni are expected to resume drilling in the same area in the first half of 2022. This drilling update emanating from the Cypriot government prompted a retaliatory declaration from Turkey, with Ankara – which disputes the area waters that straddle its continental shelf and fall off Turkish Cyprus – said it would not be dissuaded from drilling at proximity in disputed waters. Such statements will make investors in these Western drillers nervous, given an earlier incident in 2018 when Turkish warships prevented Eni’s drillship from exploring.

After a historically shocking detente between Israel and the United Arab Emirates last year and the signing of major energy deals soon after, one of the biggest Israeli-UAE deals is now in question. This week, Israel’s Energy Minister called for the cancellation of his country’s oil pipeline deal with UAE investors, citing environmental concerns. This reflects the unease, especially within Israel, and the political backlash is now being felt, which in turn could upend diplomatic progress.

In retaliation for Poland’s hosting of “dissidents”, Belarus restricted flows via a Russian pipeline to Poland. There is also speculation that Belarus is “arming” migrants positioned at the border who attempt to enter Poland – the aim being to provoke armed conflict.

Markets

Europe’s energy crisis is getting worse. Germany has suspended the Russian pipeline certification process which could provide relief, and analysts are predicting power outages this winter if it is colder than normal. Meanwhile, the gas contract in the Netherlands – a benchmark for Europe – has risen 60% so far in November. LNG prices are also on the way to record highs. China says its energy crisis that led to blackouts last month is now easing, as its coal production increases. Gasoline prices in the United States are also still high, with crude oil inventories declining there. President Biden, in an effort to lower gasoline prices, has called on major oil-consuming countries, including China, to release oil from their reserves as part of a coordinated effort to lower the price crude oil. All signs point to high prices persist for the winter season, with OPEC warning that the market will return to oversupply in 2022.

In a context of rising inflation and shrinking foreign exchange reserves, Sri Lanka closed its only oil refinery, capable of refining 50,000 bpd. Sri Lanka will keep the refinery closed for around 50 days while it focuses on supplying food and medicine. The Department of Energy has assured the public that the shutdown will not lead to a fuel shortage, as it will instead import refined products.

Petroperu evacuated workers from one of its oil stations in the Amazon after an indigenous community threatened to take it over. The company operates an oil pipeline there that carries oil to the coast, but no oil has been transported since October due to indigenous protests.

Offers and discoveries

Woodside Petroleum sells a 49% non-operating stake in its Pluto Train 2 joint venture to Global Infrastructure Partners. PT2 is part of Woodside’s offshore development in Scarborough, with plans for a new LNG train to be built at the existing onshore Pluto LNG site. The first shipment is expected to ship in 2026. The deal is submitted to FID for PT2 and Scarborough, which is expected next month. Woodside will retain the 51% interest.

Chile has a fantastic project where it would export solar power to China through a massive 15,000 km submarine cable that could cost up to $ 23 billion to build. On top of that, Chile would need to add solar power plants to expand its 3,106 MW of existing capacity. The project would build on Chile’s vast solar capacities in its Atacama Desert – the region with the highest solar radiation in the world. It would also take advantage of the fact that when it’s daytime in Chile, it’s dark in Asia, and when it’s summer in one place, it’s winter in another.

After being successfully listed on the Abu Dhabi Stock Exchange, ADNOC has awarded $ 6 billion in contracts for drilling equipment and services as it attempts to increase its oil production capacity to 5 million barrels per day by 2030 and increase its production of natural gas. The contracts cover wellheads and related components and more.

Regulation

Shocked by Shell’s plans to leave the Netherlands, the Dutch government will consider tax changes for oil and gas companies to encourage them to stay. The government is considering removing a 15% withholding tax, but such a bold move may not gain the support needed to achieve it. It is not known if that would keep Shell there.

BOEM’s drilling rights auction was a success, generating $ 191 million in high bids, with Chevron and Anadarko the biggest spenders. While U.S. oil and gas companies have been prudent in their spending even as oil prices have soared, this sale has shown that the prospects for reducing the carbon footprint are still attractive, even in these uncertain times. The lease sale came after a court injunction against President Biden’s suspension of oil and gas lease sales.

At the same time, the Biden administration has banned new oil and gas leases on federal lands in New Mexico over the objection of Native American tribes who claim the drilling encroaches on sacred and cultural sites. The DoI will review a rule banning new oil and gas developments within 10 miles of Chaco Culture National Historic Park over the next 20 years. New mining concessions in this area will also be banned.

Renewable energies

Shell has acquired from Simply Blue Group a 51% stake in a floating wind farm project in Ireland that will generate 1.35 GW of electricity capacity. The price was not disclosed. The project is designed to power over one million homes.

The United States is expected to install a record level of solar and wind capacity next year, including up to 44 GW of solar capacity, 27 GW of wind capacity and 8 GW of battery storage capacity. Solar energy is now potentially on track to account for 20% of all electricity production in the United States by 2050, up from 3% in 2020.

Munich-based solar car company Sono Motors debuted on the Nasdaq after another IPO of green cars last week, Rivian. Sono (SEV) has listed 10 million shares at $ 15 each. Sono’s plan is to introduce a low-budget electric vehicle called Sion, designed for urban commuting. Deliveries are expected in 2023. Sono said the vehicles could travel 10 miles a day from the sun, while its 35kW battery would be good for 160 miles.

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