Port Strikes: German Union Rejects Deal, India Settles, US Seeks Mediation

Union plan a strike in Hamburg over the proposed sale to MSC as port unrest continues around the world (Hamburg file photo)

Published Aug 27, 2024 4:03 PM by The Maritime Executive

 

 

Labor unrest continues at ports around the world during the newest rounds of contract talks and the first in many cases after the pandemic, surge in port volumes, and global inflation. Strikes or looming actions are impacting ports ranging from Germany where the union held day-long stoppages at the major ports, to Fremantle, Australia where pilot boat operators and traffic control personnel walked off the job for 48 hours and threatened more actions, and a nationwide strike was due to start tomorrow in India.

Indian officials are reporting it went down to the wire in a marathon meeting after more than three years of negotiations. The Shipping Ministry set up a Bipartite Wage Negotiations Committee in March 2021 but the country’s 12 major ports were on the verge of an “indefinite action” by around 18,000 employees affiliated with multiple unions.

Six Indian unions were demanding pay and benefit improvements backdated to January 1, 2022, and the expiration of the prior contract. Reports in the Indian media indicate an MoU was reached with an 8.5 percent basic pay increase and a 30 percent consideration for holidays. Also, there is a monthly special allowance covering the period between 2022 and the end of 2026.

The same basic issues of pay, benefits, and work rules are cropping up in the negotiations in all parts of the world. Germany’s Ver.di union reports that voting on two options presented by the Central Association of German Seaport Companies (ZDS) was rejected as “completely inadequate” by its 11,500 members. At the fourth round of negotiations in July, ZDS put forward its final offers which included a 12-month option or a 16-month variant.

The union said voting concluded on August 23 and the offers were rejected. Officially they are calling for ZDS to return to the negotiating table and improve the offers. Ver.di had staged rolling strikes between Hamburg, Bremerhaven, Bremen, Wilhelmshaven, Brake, and Emden coinciding with the prior rounds of negotiations. No strikes have yet been scheduled for the contract, but Ver.di did announce plans for an August 31 action in Hamburg ahead of the scheduled vote to approve MSC’s deal to acquire half of Hamburg container terminal operator HHLA. 

The deal for the port is bad for Hamburg says the union and in addition the wage offer they said has fallen short of members’ expectations. They note members have for two years worked hard maintaining the supply chain in Germany. 

Vessel traffic personnel and the operators of pilot and other small boats in Fremantle, Australia however reported successful negotiations. They had paralyzed the port with their first walkout, and planned to stage a second 48-hour stoppage on August 25-26 but canceled it. Terms of the agreement were not announced but officials hailed the success of the negotiations and said there would be no further disruptions in Australia’s key western port.

Looming though is still the unsettled dispute for the U.S. East and Gulf Coast ports which has the greatest potential to disrupt global supply chains. A local issue over automation stalled the efforts to proceed with master contract negotiations. There is little more than a month till the September 30 deadline with the International Longshoremen’s Association saying it will not extend past the deadline. Last week, the ILA and the U.S. Maritime Alliance (USMX) each filed with the Federal Mediation & Conciliation Service (FMCS). The ILA has refused talks for the master contract as part of its stance against port automation. USMX says it is ready to resume talks.

National Longshore Strike May Hit All of India's Major Ports on Wednesday

Container terminals at Jawaharlal Nehru Port (file image)

Published Aug 26, 2024 8:29 PM by The Maritime Executive

 

After nearly three years of wage negotiations, India's longshore unions are on the verge of a strike, and they could stage a walkout as early as 0600 hours Wednesday morning if last-ditch talks fail to produce a compromise. 

On Tuesday, the Centre of Indian Trade Unions will meet with the state-run India Ports Association for a final round of discussions. If the talks do not work out, strikes could hit all 12 major Indian seaports, including Kandla, Jawaharlal Nehru, Kochi, Kolkata, Visakhapatnam, Tuticorin and Mumbai. 

The walkouts will cover about 20,000 longshoremen and harbor tug operators, the union consortium said. The participation of tug crews in the strike means that even privately-operated, non-union terminals in the 12 affected ports may not be able to dock and undock vessels.

A full-scale strike would shut down about 2.3 million tonnes of cargo movement every day, Water Transport Workers' Federation leader T. Narendra Rao told Hindu Business Line. Rao called the ports association's approach to talks "lethargic and cruel," and said that 32 months was too long to wait for a new contract. "We are not begging for anyone's generosity or for alms, but struggling to keep our rights and privileges upright," Rao said. 

Indian shipping interests have expressed dismay at the prospect of a major port shutdown, especially since the disruption in the Red Sea has already affected the shipping routes to and from the subcontinent. However, ships' agency GAC advised that the strike might not be quite as severe as forecast. The agency believes that tanker and LNG terminals will probably not be affected, and it says that only four ports - Tuticorin, Chennai, Ennore and Vizag - have actually been served with  strike notices so far. 

"[The strike] will lead to severe delays and congestion, extended turnaround time for vessels. Prolonged disruption will also result in higher operational costs like demurrage, detention, and re-routing expenses," GAC advised. 

Eni receives approval for Geng North and Gehem gas projects in Indonesia

These approvals pave the way for the establishment of a new production hub, known as the Northern Hub, in the Kutei Basin

Staff Writer 26th Aug 2024

Indonesian authorities approve Eni’s POD for Geng North and Gehem gas projects. (Credit: QR9iudjz0 on Freeimages.com)

Eni has received approval from Indonesian authorities for the plan of development (POD) for its Geng North (North Ganal PSC) and Gehem (Rapak PSC) fields, as well as the Gendalo and Gandang fields (Ganal PSC).

These approvals pave the way for the establishment of a new production hub, known as the Northern Hub, in the Kutei Basin. Additionally, Eni has been granted a 20-year extension for the Indonesia deepwater development (IDD) licences covering the Ganal and Rapak blocks.

With these approvals, Eni is set to significantly enhance its production capabilities in the East Kalimantan region, targeting approximately two billion cubic feet per day (bcf/d) of gas and 80,000 barrels per day (bopd) of condensates.

This production will supply both domestic and international markets, leveraging existing infrastructure in the region, including the Bontang LNG plant and the Jangkrik floating production unit (FPU).

Eni CEO Claudio Descalzi said: “The approval of the Northern Hub and Gendalo & Gandang Plans of Development by the Indonesian authorities marks a crucial milestone towards the final investment decision (FID) for both gas projects, aligning with our decarbonisation and energy security strategy.

“The establishment of a new production hub in the Kutei Basin represents a significant shift for Eni in Indonesia. This outcome is the result of a consistent strategy that combines our exploration expertise with the acquisition of IDD and Neptune assets, providing us with a strong leadership position in a world-class basin, close to existing facilities and major markets.”

The Northern Hub POD includes the development of five trillion cubic feet (TCF) of gas and 400 million barrels of condensates from the Geng North discovery, which Eni announced in October 2023.

The project also involves the development of the 1.6 TCF Gehem discovery through subsea wells, flowlines, and a newly constructed floating production, storage, and offloading (FPSO) unit.

This FPSO will have the capacity to process approximately one billion cubic feet per day (bcf/d) of gas and 80,000 barrels of condensates per day, with storage for one million barrels. Gas processed on the FPSO will be transported via pipelines to onshore facilities at Santan terminal and integrated into the East Kalimantan pipeline network.

Part of the gas will be liquefied at the Bontang LNG facility, with the remainder supplied to the domestic market. The FPSO will also stabilise and store condensates for evacuation via shuttle tankers.

In addition, the approved Gendalo and Gandang POD will develop two TCF of gas reserves in the Ganal PSC using subsea wells connected to the Jangkrik FPU. This development is expected to extend the Jangkrik gas production plateau, currently at approximately 750 million standard cubic feet per day (mmscf/d), by at least 15 years.

These developments result from Eni’s partnership with SKK Migas and are anticipated to have a substantial impact on local content. They will also increase the utilisation of the Bontang LNG plant’s capacity, ensuring a consistent supply of gas for domestic consumption.

Eni plans to undertake a drilling campaign over the next four to five years to explore the near-field potential within its operated blocks in the Kutei Basin. The area is estimated to hold over 30TCF of gas, with risks significantly mitigated following the Geng North discovery.

The Italian oil and gas firm operates the North Ganal Block – Geng North field with an 83.3% participating interest, while Agra Energi holds the remaining 16.7%. In the Ganal and Rapak blocks, Eni holds an 82% participating interest, with Tip Top as a partner holding the remaining 18%.

Last week, Eni closed the previously announced $783m sale of Nigerian Agip Oil Company (NAOC) to Oando, a Nigeria-based energy solutions provider.

Canada's LNG Energy Group Creates Oilfield Services Division in Colombia

by Rocky Teodoro
|Rigzone Staff
| Monday, August 26, 2024 

|
'LEC is a one-of-a-kind operator with the equipment, personnel and expertise to offer turnkey drilling and workover solutions'.
Image by Igor Borisenko via iStock

LNG Energy Group Corp. has created a new oilfield services division at its wholly owned subsidiary in Colombia, Lewis Energy Colombia Inc. (LEC).

LEC owns and operates two drilling rigs and one workover rig that are capable of executing a wide range of well services, including new exploration and development wells, LNG Energy Group said in a news release.

“LEC is a one-of-a-kind operator with the equipment, personnel and expertise to offer turnkey drilling and workover solutions,” LNG Energy Group Chairman and CEO Pablo Navarro said. “Through the creation and deployment of the Oilfield Services Division, LEC will not only generate another revenue stream, but further strengthen its position as an integral part of the energy landscape in Colombia”.

The oilfield services division will be led by Matthew O’Neill, head of LEC’s Completion and Well Intervention Services. O’Neill has worked in the oil and gas industry for 27 years and has been with the company since 2015. He has held various roles in the industry, from a wireline field engineer up to senior management, and has worked across Europe, the Middle East, West Africa, North America and Latin America. Prior to LEC, O’Neill worked for the global oilfield services company Schlumberger, according to the release.

LNG Energy Group said it looks to mobilize its equipment and personnel in the fourth quarter.

LEC has three rigs on the ground in its Sinú-San Jacinto Norte-1 Block near Barranquilla, Colombia. They include one 1,600-HP top-drive drilling rig, one 1,000-HP top-drive drilling rig and one 550-HP workover rig. These rigs come complete with generators, pumps, blowout preventers (BOPs), mud systems, tanks and other equipment needed to fully execute drilling and workover operations, LNG Energy Group said. Together, the rigs and associated equipment have an estimated value of approximately $10 million.

According to LNG Energy Group, the Colombian natural gas market is facing a supply-demand imbalance, which was further exacerbated in 2024 by the El Niño phenomenon leading to lower rainfall, subsequent reduced hydroelectric power generation, and further reliance on natural gas fired power plants. The country can meet its growing domestic natural gas demand through additional exploration and development of natural gas fields, which should “translate into an increase in demand for efficient and effective drilling services along with experienced service providers,” the company noted.

Since LEC’s entry into Colombia in 2008, it has drilled 70 exploration and production wells and completed numerous workovers using internal equipment. The company has had a wildcat success rate nearly double the industry average, according to the release. The efforts have been led by an expert in-house team that collectively has drilled more than 3,000 wells between the Eagle Ford and Austin Chalk Shales in south Texas and in Latin America.

Toronto, Ontario-based LNG Energy Group describes itself as focused on the acquisition and development of oil and gas exploration and production assets in Latin America.

 

$1 Trillion LNG Infrastructure Boom Threatens Climate Goals

By Felicity Bradstock - Aug 23, 2024

• A report by Earth Insight warns that the planned $1 trillion expansion of LNG infrastructure could harm ecosystems and hinder climate progress.
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• Wealthy Western nations, despite advocating for a green transition, are leading this expansion and issuing the majority of new oil and gas licenses.
• 
  
• Climate activists criticize this as hypocritical and call for greater investment in renewable energy, especially in developing countries.

There is a massive natural gas project pipeline for the next decade, as several world powers have increased their gas production in line with the rise in demand. Much of this production increase will come from wealthy Western countries, with several states using gas as a transition fuel in the shift away from more polluting coal and oil. However, this is leading climate activists to point out the hypocrisy of these states calling for a green transition while also contributing heavily to the rise in global gas production. 

The demand for natural gas has been rising, as several countries decrease their dependence on coal and opt for gas as a transition fuel in pursuit of a shift to green. The Russian invasion of Ukraine in 2022, and subsequent sanctions on Russian energy, also led several gas powers to increase their output to fill the gap and ensure that countries that were heavily dependent on Russian gas could maintain their supply. This has created a mid-term rise in demand that is expected to level out as countries increase their renewable energy capacity.

A recent report by the Sacramento-based NGO Earth Insight suggests that the project pipeline for new LNG infrastructure, which totals over $1 trillion, will contribute to environmental degradation and the deceleration of net-zero progress. Earth Insight warns that greater LNG output could threaten fisheries, human health, ecosystems, and the global climate. It will also make it extremely difficult to achieve the 1.5-degree warming limit set in the 2015 Paris Agreement. 

Tyson Miller, the Executive Director at Earth Insight, stated, “Investing in LNG infrastructure – especially in some of the world’s most important nurseries of marine life – just doesn’t make any sense. At this point in the energy transition and nature crisis, it’s a one-way ticket to stranded assets and won’t help us solve the climate crisis.” 

Yet, most of the countries contributing to the massive LNG expansion pipeline are those also calling for a global green transition. Certain oil-rich states, such as Russia, Saudi Arabia, and Qatar, have been repeatedly criticised for doing little to reduce their fossil fuel production and reduce greenhouse gas emissions in recent years, in response to pressure from organisations such as the International Energy Agency (IEA) to transition to green. However, green transition champions, including the UK, the US, Canada, Norway and Australia, are increasingly being seen as “the other petrostates”, due to their continued pursuit of fossil fuels. 

These five countries contributed over two-thirds (67 percent) of all new oil and gas licences issued worldwide since 2020. One of the main criticisms of this heavy contribution to global oil and gas output is the fact that these countries have the economic capacity to fund a green transition, with little need for long-term fossil fuel production to meet their domestic demand. Olivier Bois von Kursk, the co-author of the report, stated, “It is deeply concerning that exploration activity has not just continued since the COP28 agreement but increased. Rich countries with relatively low dependence on fossil fuel revenues should be the first to stop issuing licences. We’re not seeing that in the data.” 

Harjeet Singh, the global engagement director for the Fossil Fuel Non-Proliferation Treaty Initiative, highlighted, “The hypocrisy of wealthy nations, historically responsible for the climate crisis, is staggering as they continue to invest heavily in fossil fuels – putting the world on track for unimaginable climate catastrophe while claiming to be climate leaders.” Singh added, “Despite having the economic means to transition away from fossil fuels, these nations are petrostates choosing profit over the planet, undermining global efforts to avert the climate emergency.”

So far this year, around three dozen high-capacity, low-dependency countries, including the U.S., the U.K. and Norway, have awarded 121 new licenses, which is more than the rest of the world combined. As much as 11.9 billion tonnes of greenhouse gas emissions could be released during the lifetime of all existing and upcoming oil and gas fields expected to be licensed by the end of the year. Many of these projects will be established in developing countries, which do not have the economic means to invest in a green transition. 

Several developing states have called for greater funding from high-income countries to support a green transition in the developing world during the COP climate summits in recent years. India’s Prime Minister, Narendra Modi, has repeatedly called for greater support from some of the world’s richest countries to achieve India’s green transition. In 2021, Modi called on developed countries to set a target of contributing at least 1 percent of their GDP to green projects in the developing world. Although new schemes for funding have been developed, there is a severe underinvestment in the increase of renewable energy capacity in the developing world, with most financing continuing to go to oil and gas operations. 

By Felicity Bradstock for Oilprice.com

 

The World’s Biggest Gas Reservoir Is At A Tipping Point

By Simon Watkins - Aug 19, 2024

• Iran is investing $70 billion to address declining output from the crucial South Pars gas field.
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• The decline in production threatens to reduce Iran's petrol output by 40% and increase petrochemical costs by up to $12 billion annually.
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• Challenges include outdated technology, geopolitical tensions with Qatar, and potential inefficacy of local and Chinese contractors to mitigate the field's production decline.

Iran is embarking on a US$70 billion investment programme of measures to attempt to halt a dramatic decline in output from its crucial South Pars gas field. A failure to do so will result in the loss of 40 percent of the country’s petrol output from the Persian Gulf Star gas condensate refinery, and the addition of up to US$12 billion a year of petrochemical costs, according to Iranian Gas Institute forecasts. “South Pars’ gas output provides nearly 80 percent of the our [Iran’s] total gas production, so it is vital to all segments of business and society that this does not drop significantly,” a senior energy industry source who works closely with Islamic Republic’s Petroleum Ministry exclusively told OilPrice.com last week.

In broad terms, the South Pars site spans 3,700 square kilometres and holds an estimated 14.2 trillion cubic metres (tcm) of gas reserves plus 18 billion barrels of gas condensate. In addition to generating 78 percent of the country’s gas production, it also accounts for around 40 percent of Iran’s total estimated 33.8 tcm of gas reserves (mostly located in the southern Fars, Bushehr, and Hormozgan regions). Crucially in the current context as well is that it is one part of the two that constitute the world’s biggest gas reservoir by far, with 51 tcm of reserves. The other part is Qatar’s 6,000 square kilometre North Dome (or ‘North Field’), which is the foundation stone of its world-leading liquefied natural gas (LNG) exporter status.Related: Libyan Central Bank Kidnapping Highlights Oil Wealth Rivalry

Iran split South Pars into 24 phases for development, with broad production targets ranging from around 28 million cubic metres per day (mcm/d) to about 57 mcm/d – the latter being a target for the perennially controversial Phase 11. After the Joint Comprehensive Plan of Action (‘JCPOA’, or colloquially ‘the nuclear deal’) had been implemented on 16 January 2016, France’s then-Total renewed its 2009 commitment to develop the Phase, which had been dropped in 2012 as the E.U. ramped up sanctions against Iran. The French oil and gas giant held a 50.1 percent stake in the Phase 11 project, ahead of the 30 percent stake of the China National Petroleum Corporation and a 19.9% holding by Petropars, a wholly owned subsidiary of the National Iranian Oil Company. Total quickly invested around US$1 billion in the Phase and made progress on the site, until in May 2018 came the withdrawal by the U.S. from the JCPOA, as analysed in full in my new book on the new global oil market order. Given the size and scope of Phase 11, it became a focal point of Washington’s attention in the aftermath of the withdrawal, and it put the French under extreme pressure to pull out of the project. Under the terms of the contract, CNPC then took charge and little progress has been made since then.

This provides a microcosm of what has happened to Iran’s oil and gas sector since then. The key problem in the substitution of leading Western oil and gas firms with Chinese ones has been that the latter lack the latest technology available to the former. The same is now true of Russian oil and gas firms which have been denied much of the same technology through various sanctions since it invaded Ukraine’s Crimea region in 2014. According to assessments from Iran’s own National Development Fund, the country’s gas production will fall by at least 25 percent within the next 10 years due to falling pressure in the fields, with South Pars seeing a 30 percent decline.

To attempt to redress this, March saw Iran’s Petroleum Ministry agree to a US$20 billion programme with various local firms to build 28 massive platforms to boost pressure on the South Pars site. However, little progress has been made on these, as neither the domestic companies nor their Chinese and Russian backers have the required technology and know-how. The latest programme to be announced by the Petroleum Ministry – the drilling of 35 new wells across the South Pars site – appears geared towards maximising production from the field while it still can, rather than addressing the fundamental causes of the reduction in pressure and attempting to slow them down. Indeed, according to official Petroleum Ministry statements, the new drilling is intended to boost output over the site by 35 million mcm/d over the next three years. “Part of the problem is the geology of the site, with a natural drift towards the Qatari side in several places rather than the Iranian one,” the Iran source told OilPrice.com last week. “But another part has been the many clumsy attempts by local contractors at optimising extraction over the years with no thought of the longer-term consequences,” he added. “There are multiple examples of the wrong areas being drilled, which has weakened the surrounding structures, so drilling 35 new wells having done this is only likely to make situation worse,” he said.

Given this, Iran is looking to China to increase its pressure on Qatar to take a more cooperative approach to developing the two halves of the supergiant gas reservoir, the source added. “Qatar had a moratorium on gas production from its own North Dome field from 2005 to 2017, during which time it often accused Iran of drilling activity that reduced pressure on this side, and asked China to intervene on its behalf with Iran, which it did,” the source told OilPrice.com. “At that stage in early 2017, the two sides [Qatar and Iran] sat down and agreed to work together to ensure the sustainability of the site, so Iran wants the same assurance now from Qatar,” he added.

This is even more urgent on Iran’s side, as Qatar is now embarked on its own drive to dramatically increase its production from the North Dome. The Emirate’s expansion program will see six major new developments in the North Field East (NFE) and North Field South (NFS) to 2029. Four new ‘trains’ (production facilities) – each with 8 million metric tonnes per annum (mtpa) – will be built on the NFE site, and two (with the same production capacity) in the NFS site, totalling 48 million mtpa of new LNG production. At the end of February, QatarEnergy announced another set of projects – focused on its North Field West (NFW) – that will increase its LNG output from the current 77 million mtpa to 142 million mtpa before the end of this decade. This compares to the 404 million mtpa of LNG traded globally in 2023 and to industry estimates that this figure will reach around 625-685 million mtpa in 2040.

The problem for Iran in all of this is that although Qatar is famously diplomatic in its dealings with both the East and the West, pressure from the U.S. and its allies on steering the Emirate into their sphere of influence have intensified since Russia invaded Ukraine on 24 February 2022. Prior to that, it had spent the previous year busily signing huge long-term LNG contracts with China, as also analysed in full in my new book on the new global oil market order. With extraordinary prescience – or something – Beijing knew ahead of time that some major global event would results in LNG becoming the world’s emergency energy source very soon. Consequently, the competition between the U.S. and its allies and China and its partners for upcoming long-term LNG contracts from Qatar has been extreme. It is likely to remain so, with oil and gas major Shell forecasting that global demand for LNG is projected to increase by more than 50 percent by 2040, even without any new major conflict (such as in Taiwan) in the next few years.

By Simon Watkins for Oilprice.com

Is China's Demand for Oil Nearing Its Peak?

By Irina Slav - Aug 24, 2024

• China's oil imports in July were down 12% from June and 3% from July 2023, raising concerns about the country's economic health and future oil demand.
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• Factors such as the rise of electric vehicles, the shift to LNG in trucks, and a slowdown in manufacturing and real estate are contributing to this trend.
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• While some analysts believe the slowdown is temporary, others argue that China's oil demand may have already peaked, with significant implications for global oil markets.
• 
  

Uncertainty about Chinese oil demand has become the single most important bearish factor for oil. Every time analysts cite lower prices it is because of uncertainty about Chinese demand—or the potential certainty that this demand is not going higher.

As the world’s largest importer of oil, the Asian powerhouse has pretty understandable significance for oil markets. The players in those markets may need to start adapting to the idea that China will not continue to consume ever more crude oil far into the future.

The latest import figures for China and crude oil disappointed many of those who had made the above assumption. In July, China imported 12% less oil than it did in June and 3% less oil than it imported in July 2023. The figures, as usual, spurred comments that China’s economy was slowing down—and so was oil demand—and international prices fell.

In further potentially bearish news, India just surpassed China as the biggest buyer of sanctioned Russian crude at a rate of close to 2.1 million barrels daily, which represented a 4.2% monthly increase and a 12% annual increase. 

Along with the oil import figures, economic data on China has fueled a lot of the demand uncertainty gripping traders and analysts alike. A slowdown in manufacturing growth and a real estate crisis are pretty solid reasons to worry about demand for oil in a country known for its manufacturing industry and once booming real estate sector.

It appears that this uncertainty has now reached its culmination: Reuters columnist Clyde Russell this week posed the question of whether China’s demand had not already peaked. Russell noted China’s record import rate for crude oil last year and the perception that most analysts and traders appear to believe that this year’s slowdown is a temporary thing. And then he asked the question: what if it isn’t?

It is easy to see why so many market participants expect the demand wobble to be a temporary problem. As Russell pointed out, China’s oil imports have been on a straight upward trajectory for 19 years in a row before plummeting in 2020 and 2021 because of the pandemic lockdowns. Then they started recovering, to reach an all-time high of 11.29 million barrels daily last year.

It was China’s post-pandemic recovery that many oil bulls pinned their hopes on. After all, it only made sense that the country that had been importing ever-growing volumes of oil would return to this growth trend after the end of the lockdowns. It appears this group of market players ignored other processes, such as the real estate industry’s troubles after years of growth on government steroids and the manufacturing slowdown in a global economy where many big players are still struggling to get back on their feet after the pandemic.

Then, of course, there is the electric vehicle story. China set out to become a leader in electric vehicles, and it did. The country is currently the biggest EV market in the world. And it is a market that continues to grow, unlike the EV market in Europe, for instance, where EVs are still struggling to compete with internal combustion engine cars.

This is not the case in China, where sales of plug-in hybrids and battery electric cars represented over 50% of all car sales, at a total of 853,000, per figures from market research company Rho Motion as cited by Reuters earlier this month. It was this trend in EV sales growth that prompted Sinopec, the state oil major, to predict that oil demand in China would peak before 2027.

A contributing factor to the expectation of peak oil demand is the replacement of diesel with liquefied natural gas as fuel in trucks. With LNG getting cheaper and burning more cleanly than diesel, industrial machinery operators are switching, with demand destruction for diesel topping 200,000 barrels daily last year, according to Wood Mackenzie.

Some of these factors that play a part in determining China’s oil demand are consistent trends, such as EV growth. Others are market-determined, such as the replacement of diesel with LNG. The moment LNG prices jump, the switch will slow down. There is also the manufacturing and real estate factor, where the slowdown is unlikely to be permanent. Yet, given the overcapacity that China has built in both sectors, the recovery may be more modest than bulls might hope.

What this means is that China may not return to its path of consuming ever-growing volumes of crude oil. To be fair, however, it was unrealistic to expect it would. China relies on imports for close to 60% of its consumption, and China doesn’t like to rely on imports so much. It makes sense to do everything to reduce this dependence by encouraging alternative energy solutions. In other words, China’s peak oil demand may be here, or it may be around the corner—but it is only a matter of time before that peak comes. The sooner the market adjusts, the sooner it could start paying attention to other factors determining global prices, such as supply.

By Irina Slav for Oilprice.com

 

China Launches New Generation of Energy-Efficient Inland Cargo Ships

China launched the prototypes for a new generation of inland shipping (Shandong Xinneng Shipbuilding)

Published Aug 23, 2024 6:59 PM by The Maritime Executive

 

 

Chinese officials are highlighting the launch of the first of a new generation of highly energy-efficient inland cargo ships. The vessels feature a standardized design for mass production and will be the leaders in the modernization of China’s inland operations.

The two ships were launched on August 22 at the Shandong Xinneng Shipbuilding Company. One is 295 feet (90 meters) in length and fueled with LNG for container transport. The second vessel is 222 feet (67.6 meters) in length and uses a hybrid electric drive to transport general cargo. Among the innovations being promoted is that they were able to increase container capacity from 70 to 161 boxes. They also feature a fuel-efficient design.

Among the technologies employed are inland power packs for electric power as well as a gas-electric hybrid power system. The hull is low resistance. They predict the ships will have about six percent lower resistance which will produce at least a three percent energy savings. The deadweight of the vessels is five percent lower than older ships and through the use of LNG and batteries, emissions will be lowered by 90 percent. Carbon emissions with lowered by 15 percent.

 

Two prototype vessels launched in China (Shandong Xinneng Shipbuilding)

 

The ships will become the largest new energy intelligence shipping on the Beijing-Hangzhou canal. Officials point out that there are more than 10,000 ships operating on the inland rivers in China. Most of the ships they said are generally more than 10 to 15 years old and lack standardized designs. They also have higher emissions and lack fuel efficiency.

The new ships they predict will be the first of a batch of new energy intelligence shipping for the inland industry. A key feature is that the design has been standardized for ease of production. Xinneng reports it has four standardized designs. In addition to the 90-meter LNG-fueled containership and smaller multi-purpose vessel, they are proposing a 67.6-meter fully battery-powered multi-purpose ship and a 57.8-meter (189-foot) LNG-fueled ship.

Using the standardized designs, the shipyard says will save costs and time in production and also make the ships more efficient to operate. Xinneng Shipbuilding predicts it can each year build 400 ships, each in a range of 1,000 to 2,000 tons for inland shipping.

 

NYK Completes World’s First Commercial-Use Ammonia-Fueled Vessel

Sakigake becomes the world's first ammonia-fueled commercial vessel and will demonstrate operations in Tokyo Bay (NYK)

Published Aug 23, 2024 1:01 PM by The Maritime Executive

 

 

Japan’s NYK working in conjunction with IHI Power Systems has completed the conversion of a tugboat operating in Tokyo Bay to run on ammonia-fueled propulsion. The project which began four years ago marks the first successful deployment of a commercial vessel fueled by ammonia. The project was reviewed, and the vessel now classed by ClassNK.

The conversion project, which was awarded in August 2022, is based on the 272-ton tug Sakigake which was built in 2015 as Japan’s first LNG-fueled tug. At the time it was viewed as a proof of concept for alternative fuel operations in the class and it is again taking that role for ammonia fueled propulsion. The NYK Group company Shin-Nippon Kaiyosha will now employ the vessel in Tokyo Bay over a three-month demonstration period.

The vessel measures just 122 feet in length. NYK reported that the project which was under Japan’s New Energy and Industrial Technology Development Organization (NEDO), is part of an effort to develop vessels equipped with domestically produced ammonia-fueled engines. They had to overcome numerous challenges in handling and operating on ammonia.

After eight years of tug service in Tokyo Bay, the vessel was docked at the NYK Group's Keihin Dock Co. in October 2023 for conversion to an ammonia-fueled vessel. The main engine and fuel tanks were replaced for ammonia, and sea trials were conducted using ammonia as fuel.

Bunkering of the Sakigake, which is also being called A-Tug, took place for the first time in Yokohama, Japan in July. The bunkering was completed using the truck-to-ship method, marking the first time the tug has been fueled with ammonia and followed two similar bunkering operations earlier this year in Singapore for Fortescue’s converted OSV which became the first large ship to be bunkered with ammonia as part of testing and certification by the Singapore authorities.

As part of the development of vessels equipped with domestically produced ammonia-fueled engines through NEDO’s Green Innovation Fund Project, NYK is also conducting research and development on an ammonia-fueled medium gas carrier with Japan Engine Corporation, Nihon Shipyard Co., IHI Power Systems, and ClassNK. This vessel is scheduled for delivery in November 2026.

The NYK Group reports it will continue to utilize the knowledge gained through the research and development of these vessels to contribute to the decarbonization of the shipping industry. The group plans to promote and expand the use of ammonia-fueled vessels.

GREENWASHING

DNC Climate Panels Offered Empty Rhetoric Instead of Specific Plans

At ExxonMobil-sponsored events on the sidelines of the convention, energy CEOs rehashed fossil fuel misinformation.

By Schuyler Mitchell 

Truthout

August 24, 2024   

A man walks by a Democratic National Convention 2024 sign at the United Center on August 18, 2024, in Chicago, Illinois.Kevin Dietsch / Getty Images

The climate crisis didn’t receive much primetime attention during this year’s Democratic National Convention (DNC).

But away from the bright lights of the main stage, a series of low-profile panel discussions have offered a fascinating window into some key obstacles facing the Democrats’ climate agenda — and a lack of concrete policy proposals to overcome them.

Over the course of nearly three and a half hours, Democratic lawmakers, delegates and climate advocates convened for two Environmental & Climate Crisis Council meetings on Monday and Wednesday. The discussions boasted a broad slate of speakers, including progressives like Rep. Ro Khanna (D-California), Rep. Jamie Raskin (D-Maryland), Rep. Maxwell Frost (D-Florida) and Sen. Jeff Merkley (D-Oregon)

“I love the energy here. You’ve got the biggest caucus here at the DNC,” Khanna exclaimed during his address.

Indeed, the energy and enthusiasm in the room were palpable, even when watched via a YouTube livestream. Speakers repeatedly emphasized the climate wins of the Biden-Harris administration, particularly the passage of the Inflation Reduction Act (IRA) and the Justice40 Initiative, an executive order that allocates certain federal funds to marginalized communities overburdened by pollution. A crucial focus was placed on the intersection of climate policy and racial and economic justice. Several Democrats pointed to the fact that, during her time as San Francisco’s district attorney, Vice President Kamala Harris created one of the first environmental justice units explicitly focused on prosecuting polluters.

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“Vice President Harris and Gov. Tim Walz are committed to bold action to build a clean energy economy, to create good jobs, ensure America’s energy security, reduce emissions, protect public health, support communities in the face of climate disasters, and hold polluters accountable,” said Harris’s chief climate adviser, Dr. Ike Irby. These are admirable goals, and Irby noted that Harris and Walz are “fully committed to building upon this promise.”

How, though, will they do it? That’s yet to be seen.

The Harris campaign has yet to outline its specific plans to tackle climate change. She has already walked back on her previous pledge to ban fracking. And the speeches at these two council meetings focused heavily on past wins, not the future — such as the fact that the United States is currently set to fail to meet carbon emissions targets by 2030.

Senator Merkley, a longtime climate voice on Capitol Hill, was the only speaker on the council panels to reference this reality. “We have been woefully inadequate in addressing carbon in the atmosphere,” he said, emphasizing that “as long as we are increasing fossil infrastructure, taking more fossils out of the ground, burning more carbon, that’s more carbon in the air.” The only way to avoid climate catastrophe, he said, is to “electrify everything” and keep fossil fuels in the ground.

Merkley railed against “natural gas,” which, as he noted, is not natural at all. “Fossil gas is not a bridge,” said Merkley. “Please call it fossil gas, call it methane. There is nothing natural about pulling it out of the ground.”

Earlier this year, President Joe Biden announced a temporary pause on permits for liquified natural gas (LNG) exports, a decision that was blocked by a federal judge in July. But at an event on the sidelines of the DNC hosted by Punchbowl News — and sponsored by ExxonMobil — one Democratic lawmaker claimed that a shift from coal to fossil gas would be an “important transition” to achieve climate goals.

“It is in our national interest, it is in our economic interest, in our national security interest to export LNG, and I just hope they’ll reach that decision soon,” said Rep. Lizzie Fletcher of Houston, Texas, a city at the global epicenter of the fossil fuel industry. Fletcher is a co-chair of the Congressional Natural Gas Caucus and one of the top House Democrats receiving oil and gas dollars, trailing only Texas Rep. Henry Cuellar.

Climate advocates interrupted the event chanting, “Exxon lies, people die” — a reference to the fact that, since 1977, ExxonMobil hid its knowledge from the public that burning fossil fuels contributes to climate change.

Indeed, during the first Environmental & Climate Crisis Council meeting, Representative Khanna called out ExxonMobil by name. “We had the Exxon CEO, Chevron CEO, BP CEO, Shell CEO in front of our committee, and they gave millions of documents, and they admitted that they’d lied to the American public,” said Khanna. “They had the best scientists in the world, but they chose to lie.” Massachusetts Gov. Maura Healey also highlighted that she had sued Exxon for deceptive advertising during her time as attorney general.

Still, that didn’t stop Exxon from getting the top spot at the Punchbowl event — not a shock, given the news outlet’s past reliance on the fossil fuel company to sponsor its newsletters. Vijay Swarup, Exxon’s senior director of climate strategy and technology, told his Punchbowl interviewer that the climate crisis would need to be combated with a so-called “And Equation,” meaning fossil fuels would need to continue to be supplied, and “everybody” — including Big Oil — would “get to be part” of the climate solution.

“I don’t think this industry gets near the credit it needs to get for innovation,” added Swarup.

One of the key innovations in question is carbon capture and sequestration (CCS). Backed heavily by the oil and gas industry, the technology remains unproven at scale and would enable the continued extraction of fossil fuels.

To the chagrin of many climate activists, the IRA included tax credits for CCS projects in its climate spending. In May, dozens of environmental groups sent a letter to the Treasury Department encouraging more stringent oversight. “Carbon capture and storage projects have not effectively reduced climate pollution. They have squandered billions of taxpayer dollars, subsidized the fossil fuel industry, expanded fossil fuel infrastructure, and burdened already disadvantaged communities with even more pollution,” wrote climate advocates. “We urge you to take strong action to avoid wasting more of our tax dollars on a tax break that has been prone to fraud and abuse.”

Representative Fletcher, however, praised CCS during her Exxon-sponsored panel, claiming it “plays a huge role” in reaching climate goals. She expressed the need for “permitting reform” by the Environmental Protection Agency to fast-track carbon pipelines for CCS projects.

At another Exxon-sponsored event, just before the panel with Swarup and Fletcher, Punchbowl hosted chief executives from various energy companies, including Karen Harbert, CEO of the American Gas Association, who called fossil gas the “North Star for the next 5 to 10 years.”

“We grew faster last year than we did the year before,” said Harbert. “And I think it’s because we’re proving we’re reliable, we’re affordable, and we can reduce emissions with natural gas.” In actuality, LNG facilities have been found to leak massive amounts of methane, an atmosphere-warming gas, and recent studies have found that fossil gas could even generate more emissions than coal.

The Punchbowl panels were not part of official DNC programming, but rather one of many corporate-sponsored events, often inaccessible to other press, that occur quietly on the DNC’s sidelines. Still, at an event hosted by a news outlet targeting Washington insiders, and likely attended by Democratic delegates and lawmakers, it is troubling that misleading oil and gas industry talking points were given such a platform.

Taken together, the DNC environment council and Punchbowl panels illuminate key questions for Harris’s still-unknown climate agenda. Will she build on the IRA by taking even more aggressive action to curb emissions and move the nation away from fossil fuels? Or will her agenda fall prey to Big Oil’s faulty “climate solutions,” like CCS and “natural gas”? Only time will tell — but the clock is ticking.

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Schuyler Mitchell is a writer, editor and fact-checker from North Carolina, currently based in Brooklyn. Her work has appeared in The Intercept, The Baffler, Labor Notes, Los Angeles Magazine, and elsewhere. Find her on X: @schuy_ler