Private Investors Are Flocking Into Oil And Gas

By Alex Kimani - Oct 19, 2022

• Private equity is moving back into oil and gas following the Ukraine war and the global energy crisis.
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• Whereas some Wall Street and European banks have cut financing to fossil fuel, the massive private equity industry is happily taking their place.
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• The 10 largest private equity funds have 80% of their energy investments in fossil fuels

Over the past couple of years, Wall Street banks, E&P companies and investors have faced mounting pressure to disinvest in fossil fuels. Last year, BlackRock Inc. (NYSE: BLK), the world’s largest asset manager with $10 trillion in assets under management (AUM), sent shockwaves through the fossil fuel sector after it vowed to double down on climate activism by backing more shareholder resolutions on climate change and social issues. 

Also last year, New York City’s Mayor Bill de Blasio and Comptroller Scott M. Stringer jolted the sector after announcing that the city’s $226B pension fund plans to divest  majority of its fossil fuel investments over the next five years and also cut ties with other companies that have been contributing to global warming. 

Shortly thereafter, Rockefeller Brothers Fund, a family foundation built on one of the world’s biggest oil fortunes, followed suit by announcing that it would ditch its oil and gas investments and cease making any new investments going forward. The $5-billion foundation was initially carved from oil money in the 19th century by John D. Rockefeller’s son of Standard Oil fame.

But Russia’s war in Ukraine and the global energy crisis have completely flipped that playbook, with oil and gas sectors now attracting big money especially from private investors. According to Preqin data, so far this year, private capital funds worldwide have raised a combined $27.9 billion for oil and gas investments compared with $19.4 billion raised in all of 2021. "The fundraising environment for oil and gas is better than it was in the last five years. It's all a juggling act in the sense that it is relative to other sectors and overall fundraising is down," Fraser Van Rensburg, New York-based co-founder and managing partner of placement agency Asante Capital Group, has told Pensions & Investments.

Climate Resolutions Failing in the Face of Big Money

In another surprising development, whereas some Wall Street and European banks have cut financing to fossil fuel, the massive private equity industry is happily taking their place. According to a recent analysis from the Private Equity Stakeholder Project and Americans for Financial Reform Education Fund (AFREF), the eight largest buyout firms have put nearly as much money into coal, oil and gas as the big bank.

According to the nonprofit groups, the PE firms, which include Apollo Global Management, Blackstone Group, Brookfield Asset Management, Carlyle Group, KKR and Warburg Pincus, collectively oversee $216 billion worth of fossil-fuel assets--on par with the amount of money that big banks put into fossil fuels last year.

Another surprising find: the 10 largest private equity funds have 80% of their energy investments in fossil fuels.

"The billions of dollars private equity firms have deployed to drill, frack, transport, store, refine fossil fuels and generate energy, stand in stark contrast to what climate scientists and international policymakers have called upon to align our trajectory to the 1.5 degrees Celsius warming scenario," states a report cosigned by major climate groups including Greenpeace, Natural Resources Defense Project, Sierra Club and the Sunrise Project. 

"These polluting assets are shifting from the public markets, where there is greater amount of regulatory and public scrutiny, into the shadows of our financial industry, where private equity usually operates," Riddhi Mehta-Neugebauer, research director at the Private Equity Stakeholder Project, has told CBS News.

"Private equity firms are emerging as pollution financiers of last resort," Oscar Valdés Viera, research manager at AFREF, has told CBS MoneyWatch.

The report notes that the Blackstone Group is not only one of the world's largest private equity funds but is also one of the worst polluters. In 2020, Blackstone-backed power plants generated 18.1 million metric tons of carbon dioxide emissions, the same as 4 million gasoline-burning cars, according to calculations by PESP. The report reveals that Carlyle Group still maintains $24 billion in carbon-based energy through NGP Group, in which it holds a stake, despite earlier this year pledging to have net-zero emissions by 2050. Indeed, the report notes that 60% of Carlyle's profit in the first half of this year came from NGP.

It’s going to be a lot harder to persuade these PE firms to stop financing fossil fuel projects if this year’s happenings on the climate front are any indication.

Back in April, shareholders at Citigroup, Wells Fargo, Bank of America, and Goldman Sachs voted on resolutions recommending the companies stop any additional financing for fossil fuel projects. All the resolutions failed spectacularly, managing to garner just over 10% of the vote. In May, nearly two-thirds of investors in ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) rejected proposals for the oil giants to align their climate strategies with the Paris agreement. 

 It was yet another resounding defeat for climate activist investors, who are having a less successful proxy season this year than in 2021, as fossil fuel firms reap record profits fueled by the war in Ukraine. 

Just last year, activist investor Engine No. 1 managed to install three directors on the board of Exxon with the goal of pushing the energy giant to reduce its carbon footprint. That was despite the firm only owning 0.02 percent of Exxon’s shares. 

But these companies, their shareholders and PE firms simply are not going to pass up an opportunity to reap billions of dollars from the oil and gas boom. It’s a sentiment that was present in commentary by a Carlyle executive who disagreed with the environmentalists' timeline on how quickly it's possible to retire fossil-fuel plants.

"Carlyle's approach to invest in, not divest from, the energy transition is a different one, grounded in seeking real emissions reductions within portfolio companies over the long term. In order to work toward meaningful progress on climate change, we will continue to partner with companies across the energy spectrum to collect better data and strive for clear progress reducing greenhouse gas emissions," the company said in a statement. The fund says it’s focused on energy security as much as sustainability, which means keeping natural-gas plants online longer than initially planned. 

Meanwhile, there’s an issue of accountability. Whereas banks and oil firms are accountable to their shareholders and to the public, private equity firms are only accountable to their limited partners. PE firms raise and manage investment funds on behalf of large investors, including public pension plans thus making them more resistant to public criticism.

By Alex Kimani for Oilprice.com

 

Researchers discover previously unknown mineralogy of the deep Earth

by Arizona State University

Credit: Pixabay/CC0 Public Domain

What is the structure of the Earth? For starters, it consists of several layers: the crust, the upper and lower mantle, and the core. The mantle makes up most of our planet's volume—84%. The lower mantle represents 55% of the Earth's volume—it is also hotter and denser than the upper mantle.

The lower mantle has played an important role in the Earth's evolution, including how Earth has cooled over billions of years, how materials have been circulated, and how water is stored and transported from/to the deep interior over a geologic time scale.

For more than seven decades, the mineralogy of the lower mantle has been studied extensively. The decades of studies, including laboratory experiments, computational simulations, and the study of inclusions in deep diamonds, led to the conclusion that the lower mantle consists of three main minerals: bridgmanite, ferropericlase, and davemaoite.

In a study recently published in Nature, a team of scientists—including Byeongkwan Ko, former Ph.D. student at ASU, now a postdoctoral researcher at Michigan State University, and Sang-Heon Dan Shim, Professor at the School of Earth and Space Exploration and a Navrotsky Professor of Materials Research at ASU have completed a new high-pressure experiment employing some different styles of heating to reveal an additional mineral residing in the lower mantle.

Among these three main minerals, two minerals bridgmanite and davemaoite have both so-called perovskite-type crystal structures. This structure is also widely known in physics, chemistry, and materials engineering, as some materials with the perovskite-type structure have shown superconductivity.

At shallow depths, minerals with similar crystal structures often merge and become single minerals, typically under a high-temperature environment. For example, mineral diopside has both calcium and magnesium, and is stable in the crust. Despite the structural similarity, however, existing studies have shown that davemaoite, rich in calcium, and bridgmanite, rich in magnesium, remain separate throughout the lower mantle.

"Why davemaoite and bridgmanite do not merge to one despite the fact that they have very similar atomic-scale structures? This question has fascinated researchers over two decades," said Shim. "Many attempts have been made to find conditions where these two minerals merge, yet the answer from experiments has been consistently two separate minerals. This where we felt we need some fresh new ideas in experiments."

The new experiment was an opportunity for the research group to try various heating techniques to compare methods. Instead of increasing temperature slowly in conventional high-pressure experiments, they increased temperature very fast to the high temperature related to the lower mantle, reaching 3000–3500 F within a second. The reason for this was that once two perovskite-structured minerals form it becomes very difficult for them to merge even if they enter into temperature conditions where a single perovskite mineral should be stable.
By heating the samples fast to target temperatures, Ko and Shim were able to avoid formation of two perovskite-structured minerals at low temperatures. Once they reach the temperature of the lower mantle, they monitor what minerals form for 15–30 min using X-ray beams at the Advanced Photon Source. They found that only single perovskite mineral forms, unexpected from the previous experiments. They found that at sufficiently high temperatures greater than 3500 F, davemaoite and bridgmanite become a single mineral in the perovskite-type structure.

"It has been believed that a large size difference between calcium and magnesium, the major cations of davemaoite and bridgmanite, respectively, should hinder these two minerals from merging," said Ko. "But our study shows that they can overcome such difference in hot environments."

The experiments suggest that the deeper lower mantle with sufficiently high temperature should have a mineralogy different from the shallower lower mantle. Because the mantle was much warmer in early Earth, the group's new results indicate that most of the lower mantle had a single perovskite-structured mineral then, which means the mineralogy differed from the present-day lower mantle.

This new observation has a range of substantial impacts on our understanding of the deep Earth. Many seismic observations have shown that the deeper lower mantle properties are different from the shallower lower mantle. The changes are reported to be gradual. The merge of bridgmanite and davemaoite is shown to be gradual in the research group's experiments.

Also, the properties of a rock with three main minerals, bridgmanite, ferropericlase, and davemaoite, does not match well with the properties of the deeper lower mantle. Ko and collaborators predict that these unresolved problems can be explained by a merge of bridgmanite and davemaoite to a new single perovskite-structured mineral.

Quantum mechanical simulations of Earth's lower mantle minerals

More information: Byeongkwan Ko et al, Calcium dissolution in bridgmanite in the Earth's deep mantle, Nature (2022). DOI: 10.1038/s41586-022-05237-4

Journal information: Nature 

Provided by Arizona State University 

 STALINIST POLICY POPULATION REPLACEMENT

Zelensky: Russia Aims To Spark Exodus Of Ukrainians With Infrastructure Attacks

By RFE/RL staff - Oct 21, 2022, 11:30 AM CDT

Ukrainian President Volodymyr Zelensky told EU leaders on October 20 that Russian attacks that have destroyed a large portion of Ukraine's energy infrastructure are aimed in part at provoking a new wave of migration of Ukrainians to EU countries.

"Russian terror against our energy facilities is aimed at creating as many problems as possible with electricity and heat for Ukraine this fall and winter, and for as many Ukrainians as possible to go to your countries,” he told an EU summit in Brussels.

This should be "answered immediately," primarily by more air-defense systems sent to Ukraine, the president said.

"We must do everything possible to make it completely impossible for Russia to destroy our energy system with missiles and drones," Zelensky said in a virtual speech to EU lawmakers, calling on Ukraine's partners to provide systems "to create a truly reliable air shield."

Russia has stepped up attacks on Ukrainian civilian and infrastructure facilities since October 10, mainly using kamikaze drones that Ukraine and its Western allies say are made by Iran. Moscow and Tehran have denied the accusations.

Zelensky also warned that Ukraine suspects Russia has mined the dam and units of the Nova Kakhovka hydroelectric power plant on the Dnieper River in southern Ukraine, and if it were blown up, more than 80 settlements, including Kherson, would be in danger of flooding.

Zelensky said Ukrainian workers have been thrown out of the facility, leaving Russians in control. He asserted that Russia "has already prepared everything to carry out this terrorist attack."

He called for an international observation mission and the return of Ukrainian personnel to ensure the mines are removed from the dam and its units.

Zelensky's comment came two days after Vladimir Saldo, the Russian-appointed head of the Kherson region of Ukraine, announced an "organized, gradual displacement" of civilians from four towns on the right bank of the Dnieper River to the left side.

Saldo accused Ukrainian forces of planning to destroy the dam and also warned of "an immediate danger of flooding."

The Moscow-installed authorities of Kherson said on October 20 that about 15,000 people had left the region.

The Moscow-appointed deputy head of the Kherson region, Kirill Stremousov, encouraged people to cross over to the left bank of the Dnieper River and posted a video of a column of buses on Telegram.

Kyiv has denounced Moscow's move, calling it a "deportation" of Ukrainian civilians to Russia.

But Stremousov said people should follow the evacuation instructions and leave Kherson, one of four Ukrainian regions illegally annexed by Russia.

"Give the military a chance to do what they have to do," he said, claiming that the Russian Army will not surrender Kherson.

Zelensky’s office said Ukrainian forces on October 20 had mounted 15 attacks on Russian military strongholds in the Kherson region. Russia’s Defense Ministry spokesman said the Kremlin’s forces repelled Ukrainian attempts to advance with tanks on three Kherson villages.

Another Russian-installed official in the region, Vladimir Leontyev, said Ukrainian forces had launched five missile strikes against the Kakhovka dam.

Ukraine earlier on October 20 began restricting electricity consumption for the first time since the start of Russia's invasion as the country sustained serious damage to its infrastructure following waves of Russian air strikes targeting its electricity grid ahead of the onset of winter.

Oleksandr Kharchenko, an adviser to the energy minister, said on October 19 that there would be outages, including some that are scheduled.

"Unfortunately, according to new data, about 40 percent of the total infrastructure is seriously damaged. Repair and connection work is ongoing, but outages are expected," Kharchenko said on Ukrainian television.

In the latest Russian attack, an energy facility was struck and damaged in the Kryvorizka district of the Dnipropetrovsk region, the head of the regional administration, Valentyn Reznichenko, reported on October 20.

Earlier, a missile strike hit a major coal-fired power station in the city of Burshtyn in western Ukraine, the region's governor said.

"Our region experienced missile fire today. The Burshtyn thermal power station was hit, which caused a fire," Svitlana Onyshchuk, governor of Ivano-Frankivsk region, said in an online video statement.

The Burshtyn power station supplies electricity to three western regions and 5 million consumers.

Ahead of the summit, German Chancellor Olaf Scholz addressed lawmakers in Berlin on October 20, condemning Russia's latest drone attacks on civilian targets in Ukraine and saying that "such scorched-earth tactics will not help Russia win the war."

Scholz said such tactics by Russian President Vladimir Putin would "only strengthen the resolve and the will of Ukraine and its partners to persevere."

"In the end, Russia's bombing and missile terror is an act of desperation -- just like the mobilization of Russian men for war," Scholz said. "He wants to sow fear, divide, and intimidate. He is speculating on our weakness, but he is wrong -- we are not weak."

Scholz said the reconstruction of Ukraine after the war would be a "generational task in which the entire civilized community of states must join forces."

In London, British Defense Secretary Ben Wallace will also make a statement to parliament on Ukraine later on October 20, the House of Commons said on Twitter.

By RFE/RL

Zaporizhzhya Nuclear Plant On Backup Power As Russia Shells Nearby Substations

By RFE/RL staff - Oct 18, 2022, 

Ukraine's Zaporizhzhya nuclear power plant has again lost the connection to its last remaining power line, the director-general of the International Atomic Energy Agency (IAEA) has said.

Rafael Grossi said in a statement on October 17 that despite the loss of connectivity, the plant is receiving electricity from the grid through a backup system.

An IAEA team of experts present at the plant was informed by members of the operating staff that the line was disconnected at around 4 a.m. local time, Grossi said.

The IAEA experts reported that the plant was receiving external electricity through a nearby thermal power station switchyard under a backup arrangement was restored last week, Grossi said.

Although the plant's six reactors have been shut down for weeks, they need a constant supply of electricity to maintain reactor cooling and other essential safety functions necessary to prevent a meltdown.

Ukrainian national nuclear operator Enerhoatom said the cause of the lost connection on October 17 was the shelling of a substation located far from the plant.

Enerhoatom said in a statement that Russia was now targeting all the substations supplying Ukrainian nuclear power stations with electricity.

Related: Uncertainty Builds As Oil Markets Digest Mixed Signals

There has been no comment from Russia's state nuclear energy company on the accusation.

It was the third time the Zaporizhzhya plant's connection to this power line was lost over the past 10 days, Grossi said in the statement, adding that this underlines "the plant's fragile power situation during the current military conflict in Ukraine."

Grossi has been pushing to establish a safety and security zone around the plant and met last week with Russian President Vladimir Putin in Moscow and later with Ukrainian President Volodymyr Zelenskiy in Kyiv as part of his effort.

"Now more than ever, during these extremely difficult times, a protection zone must be established around the [Zaporizhzhya plant]," Grossi said, reiterating that the stakes were high and there was no time to lose.

"We must do everything in our power to help ensure that a nuclear accident does not happen," he said in the statement.

The Zaporizhzhya nuclear power plant, Europe's largest, has been a flashpoint in Russia's military campaign in Ukraine. Moscow and Kyiv have traded blame for months over shelling near the facility that has sparked fears of a nuclear disaster.

Russian troops occupy the plant and the surrounding area, while the plant's Ukrainian staff continues to operate it.

By RFE/RL

“Frankly Terrifying”: Energy Crisis Could Drag 26M Brits Into Fuel Poverty

By City A.M - Oct 21, 2022, 12:30 PM CDT

The axing of the energy price guarantee from April next year could lead to almost 11m UK households falling into fuel poverty, campaigners have warned, which is about 26m people.

It means more than one in three British households face the grim prospect of hardship: there are an estimated 28.1m households in the UK. The average household in Britain has 2.36 people.

The End Fuel Poverty Coalition described the outlook as “frankly terrifying” and urged the Government to focus on a new package of support and energy market reforms, alongside investment in home insulation and renewables.

The predicted increase from the current seven million households in fuel poverty to 10.7 million after the Government lifts its guarantee limiting the average household energy bill to £2,500 from April will then fall slightly – but will still leave 10.1 million households in fuel poverty in the winter of 2023/24, the group said.

Protest in London

The figures come as protesters gather in London to ask MPs to back plans for a universal basic energy allowance to meet heating, cooking and lighting needs, part of the ‘Energy For All’ petition which will be handed to Downing Street on Wednesday with more than 600,000 signatures.

The Warm This Winter campaign called for the immediate suspension of all forced transfers of households onto more expensive pre-payment meters, whether by court warrant or remotely via smart meters.

Ruth London, from Fuel Poverty Action, said: “The outlook is frankly terrifying. It is now all the more essential – and more possible – to win a totally new pricing framework like Energy For All. Finally there is now support for this inside Parliament.”

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: “The Government may have brought some stability to the markets, but it has come at the cost of huge instability in households’ finances.

“The new Chancellor must work quickly, and with consumer groups and charities, to design a new package of support and energy market reforms that will help those in fuel poverty now and post-April.

Related: Oil Prices On Course For A Second Consecutive Weekly Loss

“But while the political focus on energy bills may now have shifted to next April, millions of the most vulnerable will be living in cold and damp homes this winter and will need further financial and non-financial support.”

Firms urged to prepay customers

Meanwhile, consumer site MoneySavingExpert (MSE) urged some of the biggest energy firms to allow prepay customers with smart meters to use their £400 Government support payment on both electricity and gas, to ensure they can maintain heating this winter.

Prepayment customers with traditional meters can decide where best to use the payments, which come in six monthly instalments between now and March 2023, as they are sent as a voucher they can use to top up their electricity or gas meter. However for those with smart meters, the payment is usually applied to their electricity meter by default, so they have less choice.

Gary Caffell, head of energy at MSE, said: “We appreciate that suppliers have acted fast to deliver the first of these crucial support payments.

“But combined with the wider cost of living crisis – affecting all other areas of people’s finances – not allowing customers flexibility to transfer some or all of these payments to gas meters puts these people, many of whom are vulnerable, at a much higher risk of reaching a crisis point in the coming months.

“Some may simply not be able to afford to heat their homes.”

By CityAM

CBC  Business

Elon Musk tells investors he plans to fire 75% of Twitter employees: report

21ST CENTURY ROBBER BARON

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Social media company employs 7,500 people

The Associated Press · Posted: Oct 21, 2022 

Billionaire Elon Musk announced plans to buy Twitter earlier this year. (Dado Ruvic/Reuters

Elon Musk plans to lay off most of Twitter's workforce if and when he becomes owner of the social media company, according to a report Thursday by The Washington Post.

Musk has told prospective investors in his Twitter purchase that he plans to cut nearly 75 per cent of Twitter's employee base of 7,500 workers, leaving the company with a skeleton crew, according to the report. The newspaper cited documents and unnamed sources familiar with the deliberations.

San Francisco-based Twitter and a representative for Musk, attorney Alex Spiro, did not immediately respond to messages seeking comment.

• Elon Musk cites whistleblower as new reason to exit Twitter deal

While job cuts have been expected regardless of the sale, the magnitude of Musk's planned cuts are far more extreme than anything Twitter had planned. Musk himself has alluded to the need to cull some of the company's staff in the past, but he hadn't given a specific number — at least not publicly.

"A 75 per cent headcount cut would indicate, at least out of the gates, stronger free cash flow and profitability, which would be attractive to investors looking to get in on the deal," said Wedbush analyst Dan Ives. "That said, you can't cut your way to growth."

• Elon Musk offers to go ahead with Twitter takeover after all

Ives added that such a drastic reduction in Twitter's workforce would likely set the company back years.

Already, experts, nonprofits and even Twitter's own staff have warned that pulling back investments on content moderation and data security could hurt Twitter and its users. With as drastic a reduction as Musk may be planning, the platform could quickly become overrun with harmful content and spam — the latter of which the Tesla CEO himself has said he'll address if he becomes owner of the company.

After his initial $44 billion US bid in April to buy Twitter, Musk backed out of the deal, contending Twitter misrepresented the number of fake "spam bot" accounts on its platform. Twitter sued, and a Delaware judge has given both sides until Oct. 28 to work out details. Otherwise, there will be a trial in November.

• Majority of Twitter shareholders vote in favour of sale to Elon Musk