Russian crude shipments rebound despite sanctions
The introduction of the EU ban on Russian crude imports from December 5, and a cap on sales to other countries, led to a temporary drop in Moscow's shipments. Its seaborne crude sales, though, rebounded in January. India appears to have picked up most of the surplus. Russia has shifted most of its exports to non-western ships and insurance, including its own vessels and a “shadow fleet” of little-known tankers. Nevertheless, it is registering hefty discounts, with its main Urals grade from western Russian ports selling at a $40 discount to international Brent crude.
Russia's diesel exports also leapt in December, ahead of the European ban on oil products which comes into effect on February 5. Petroleum export revenues fell from $15.6 billion in November to $12.6 billion last month, but have not dropped so far as to threaten President Vladimir Putin’s war machine, just yet.
The fate of Russia’s exports will be increasingly important as Chinese demand rebounds. The International Energy Agency believes world oil consumption will hit a record this year at 101.7 million barrels per day (from 99.8 million bpd last year). Oil prices were broadly stable on Monday after two weeks of gains on growing optimism about China, although they dropped by more than 2 per cent on Tuesday on concerns of a global economic slowdown and a large build in US crude stocks.
Goldman Sachs says Opec+ will unwind its production cuts at its June meeting, and that market power has returned to the group, due to reviving demand and lower supply elsewhere.
High oil prices continue to buoy regional economies. Standard Chartered’s regional chief says that strong energy prices, clean energy diversification and political stability have created the strongest environment for growth in the Gulf in the last three decades. Policymakers at the World Economic Forum in Davos said they expected the GCC to continue weathering global economic headwinds.
Oman state energy company OQ plans to sell a 49 per cent share in Abraj Energy Services, a drilling firm, on the Muscat Stock Exchange. GCC oil companies, including Adnoc and Aramco, have been buying or contracting growing numbers of rigs to meet their production expansion plans. Arabian Drilling Company of Saudi Arabia raised $712 million from an IPO in October.
Power cut plunges Pakistan into darkness
All major Pakistani cities were without electricity on Monday after a grid fault. The country is suffering from an ageing network and high prices for fuel.
About half of Lebanon’s short-term fix for its electricity crisis has been accepted by the caretaker cabinet. The original plan allocated $300 million to provide six to eight hours of daily electricity for five months.
European gas prices have been falling after a mostly warm winter, and the UK’s Office of Gas and Electricity Markets estimates the cap on bills might fall below £3,000 ($3,696) by April. But a recent cold snap and low wind output has activated a plan to pay businesses and homes to turn down electricity use in case of shortages.
Britain’s defence and foreign secretaries are among several ministers and other politicians claiming substantial expenses for their second home or office fuel bills. Mark Jenkinson, MP for the northern seat of Workington, defended the claims. He told The National: “You want to run an office with no utilities? You lunatics.” The Conservative Party’s chairman, Iraq-born Nadhim Zahawi, is under pressure over his tax affairs. He previously earned more than £1 million over two years as part-time adviser to Gulf Keystone, an oil company active in Iraq's semi-autonomous Kurdish region. Meanwhile, the leader of the Labour Party, Keir Starmer, used his appearance at the WEF to promote his ideas for a global clean power alliance, an end to UK investment in new oil and gasfields, and the creation of a publicly owned energy company.
Some relief may come from TotalEnergies. The French company agreed to purchase 0.8 million tonnes per year of liquefied natural gas from Oman, some of which could go to Europe. Total also began production from Oman’s Mabrouk North-east field as it seeks to reach 500 million cubic feet per day of output by mid-2024 to feed the domestic gas system as well as exports.
Iran has arrested a German man for allegedly photographing the Aghajari oilfield, one of the country’s oldest.
Adnoc advances on carbon capture
Carbon capture, use and storage was a key theme of the just-concluded Abu Dhabi Sustainability Week (see chart). It is crucial for the Mena region to scale up CCUS rapidly to meet its decarbonisation goals, and the UAE securities regulator’s plans for carbon trading could provide crucial financial support. Adnoc has begun the world’s first project to store carbon dioxide permanently in carbonate reservoirs — rock such as limestone — containing saline water. This will help decarbonise the operations of fertiliser maker Fertiglobe.
Fertiglobe has also agreed with GS Energy of South Korea and Mitsui of Japan to set up a 1 million tonne “blue” ammonia plant in the Ta’ziz Industrial Chemical Zone at Ruwais, Abu Dhabi, which would also employ CCUS.
Adnoc Distribution and utility Taqa are establishing a joint venture, E2GO, for electric vehicle (EV) charging in Abu Dhabi. Adnoc Distribution aims to reduce its carbon intensity by a quarter by 2030, using solar panels and “green” concrete for its petrol stations, and biofuels in its vehicle fleet. Sharjah-based environmental management company Bee'ah is looking into building the country’s first recycling plant for used EV batteries, and demand for the low-emission vehicles is rising. Meanwhile, Taqa increased its stake in the Taweelah B power and water plant.
UK-based energy retailer Octopus, one of the survivors from a sector plagued by bankruptcies, is interested in expanding into the Middle East, bringing its smart systems to improve efficiency.
But Harvey Jones asks whether EV sector star Tesla, which lost three-quarters of its value early this year, is the ultimate meme stock? Tech valuations generally have fallen sharply, and the car maker faces growing competition from incumbents’ own electric vehicle launches.
Mena needs to boost renewables up to 30 times by mid-century
The Mena region is warming twice as fast as the world average. The area’s share of renewable energy has to increase between 10 and 30 times by 2050 to reach climate goals, according to a new survey by Siemens Energy. Consulting group Oliver Wyman points to the need for an energy transition, not a revolution.
The chairman of Investcorp, Mohammed Alardhi, writes that the UAE can be a leader in adapting to unavoidable climate change. The nation has doubled its number of cloud-seeding flights over the past six years as a way of boosting rainfall. Participants at WEF discussions, including The National editor Mina Al-Oraibi, pointed to the need to reform pricing of water globally to ensure fair access while limiting wastage of this crucial resource. After a long drought, California has suffered damaging floods, with US president Joe Biden saying the state would have to “rebuild better”.
Abu Dhabi clean energy company Masdar, which will issue its first green bond this year, intends to add 10 gigawatts of new capacity this year, towards its 100 gigawatt target by 2030. It signed deals to develop up to 5 gigawatts of renewables across Angola, Uganda and Zambia. Mubadala agreed to look into sustainable fuels in Pakistan. And French utility Engie wants to boost its renewables business across the GCC.
Sultan Al Qassemi points out that Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc, is the natural choice as President-designate of the UN Cop28 climate change summit in the UAE at the end of the year, and shows how seriously the Emirates is taking the event. Dr Al Jaber is also UAE special envoy for climate change and chairman of Masdar. A hectic year of climate and energy gatherings has gained another in the UAE: between the Abu Dhabi International Petroleum Exhibition and Conference from October 2 to 5 and Cop28 beginning in Dubai on November 30, the UAE will host the UN Conference on Trade and Development, with the theme of Investing in Sustainable Development.
One major environmental problem is on the way to being solved: the hole in the ozone layer is finally shrinking, after the 1987 Montreal Protocol to phase out ozone-depleting chlorofluorocarbons. This shows the power of global collective action, and how much more progress could have been made to tackle climate change with a better political alignment.
Sheikha Shamma bint Sultan writes of the Year of Sustainability in the UAE and the importance of reconnecting with nature. Adnoc will use drones to plant 2.5 million mangrove seedlings along the Abu Dhabi coast, stabilising the shoreline, enhancing a biodiverse ecosystem and trapping “blue” carbon.