Harsh Winter Weather Prompts LNG Cargo Cancellations in the U.S.

 THE ALBERTA CLIPPER HEADS SOUTH

By Irina Slav - Jan 18, 2024

Sub-zero temperatures and harsh weather have caused delays and cancelations of LNG export cargos from Louisiana and Texas, Bloomberg has reported, citing unnamed sources in the know.

Those told the news outlet that Cameron LNG had canceled at least one scheduled cargo and delayed several others, and Cheniere Energy had also been forced to delay some loadings.

The effect of these disruptions, however, is expected to be limited as the weather forecast for next week is for warmer weather, which should take care of the delays. Europe, meanwhile—the biggest buyer of U.S. LNG—is boasting lower gas prices on ample supply. Milder weather should come to the continent next week, too.

The outlook remains stable to bearish for European gas prices (on Wednesday) with no major change in temperature forecasts overnight and nominations for Norwegian gas exports to Europe back to 350 mcm/day," analysts from EnergyScan, a unit of French energy major Engie, said this week, as quoted by Reuters.

"(However) market players should continue to watch out for potential moves in the LNG delivery schedule of Qatari cargoes to European import terminals," they added.

Qatar last week diverted at least five cargos from the Suez Canal route amid continued Houthi attacks on ships in the Red Sea. Since then, the situation has escalated, with U.S. and UK forces striking targets in Yemen, to which the Houthis responded with more attacks on ships and a declaration that all U.S. and UK vessels will also become targets.

"If the situation deteriorates, it may lead to some disruptions and longer shipping times in the short term – but where there is flexibility, it's expected that we'd see shifts in trade flows," analysts from ING wrote, as quoted by Reuters.

According to them, the most important risk for LNG shipments is the potential disruption of gas flows via the Strait of Hormuz which is where Qatari LNG travels through. Yet the risk of such a disruption is remote, based on historical evidence.

Top Oil and Financial Firms Made $424 Billion in Windfall Profits in Two Years

“A tax of 90% on the windfall profits from the 24 months preceding July 2023 could generate as much as US$382 billion in revenue just from these 36 companies,” ActionAid and Oxfam said.

By Tsvetana Paraskova - Jan 18, 2024

The biggest oil companies and the top financial institutions generated combined windfall profits of as much as $424 billion in the two years to June 2023, a report by ActionAid and Oxfam showed this week.

ActionAid and Oxfam have looked at the 200 largest companies in the world by market capitalization to estimate their windfall profits, comparing the earnings in the two years up to June 2023 with profits in the four preceding years. Of these 200 companies, 14 were in fossil fuels and 22 in the banking sector, bringing the total to 36 companies in these two sectors.

Of the profits across both sectors, US$424 billion can be considered windfall profits – profits that exceed the average from the baseline four years by over 20%, the report said.

The six biggest international oil majors alone posted as much as $219 billion in combined net profits for 2022, a new record high.

Each of Exxon, Chevron, BP, Shell, Equinor, and TotalEnergies reported record profits for 2022, doubling their combined net earnings from 2021 and booking the best-ever year for Big Oil. The profits surged from around $100 billion booked for 2021, as oil and gas prices jumped last year following the Russian invasion of Ukraine, and majors raised oil and gas production to meet the growing demand for oil and limited gas supply from Russia to Europe. 

ActionAid and Oxfam, which presented their report in Davos, called for taxes on windfall profits that could finance climate mitigation measures.

The organizations said that “climate finance could get a massive boost by applying a windfall tax on windfall profits made in recent years by some of the world’s largest fossil fuels companies and the banks that finance them.”

“A tax of 90% on the windfall profits from the 24 months preceding July 2023 could generate as much as US$382 billion in revenue just from these 36 companies,” ActionAid and Oxfam said.

The World’s Coal-Fired Power Generation Hit a Record High in 2023

By Charles Kennedy - Jan 18, 2024

Global coal-fired power generation reached a record-high level in 2023, per data from environmental think tank Ember reported by Reuters columnist Gavin Maguire.

As countries, especially in Asia, looked to meet growing electricity demand and ensure their energy security, coal use in power generation hit record highs.

Per Ember data, global electricity generation from coal was 8,295 terawatt hours (TWh) between January and October, up by 1% compared to the same period in 2022.

Meanwhile, global coal exports also rose last year to more than 1 billion metric tons for the first time ever, per cargo tracking data by Kpler, cited by Reuters’s Maguire. In 2023, worldwide thermal coal exports hit 1.004 billion metric tons, rising by 6.6% from the prior year.

Global coal demand likely rose by 1.4% in 2023 and surpassed a record-high level of 8.5 billion tons for the first time, the International Energy Agency (IEA) said in a report in December.

Moreover, the three top coal producers in the world – China, India, and Indonesia – are boosting production, which is reaching new highs, the IEA said in its Coal 2023 annual report.

While coal demand in the United States and the EU was set for a 20% record decline in 2023, coal use in emerging economies “remains very strong, increasing by 8% in India and by 5% in China in 2023 due to rising demand for electricity and weak hydropower output,” the IEA said.

China’s coal demand is expected to drop in 2024 and plateau through 2026, and global demand is set to decline to 2026, “but China will have the last word,” the IEA noted

The outlook for coal in China will be significantly affected in the coming years by the pace of its clean energy deployment, weather conditions, and structural shifts in the Chinese economy, according to the agency.

By Charles Kennedy for Oilprice.com

China’s Coal Production Hit a New Record High in 2023

By Tsvetana Paraskova - Jan 17, 2024

Higher power demand and efforts to boost energy security pushed China’s coal production to a record-high level in 2023, according to official statistics data published on Wednesday.

Chinese coal output rose by 2.9% year-over-year to 4.66 billion metric tons in 2023, per data from China’s National Bureau of Statistics reported by Reuters.

Coal imports also rose last year, as some domestic mining operations were suspended for some time in 2023 due to safety inspections and concerns.

Higher demand after the COVID restrictions were lifted and higher domestic coal prices led to record-high coal imports into China, which soared by 61.8% year-on-year to 474.42 million metric tons in 2023, data from the General Administration of Customs showed last week.

In the latter part of 2023, China ramped up coal and natural gas production, imports, and consumption as its electricity demand jumped in the second half and looks to hit a record-high winter peak demand. 

Chinese authorities have been keen to avoid a repeat of the 2022 shortages and spiking prices and have instructed utilities and producers to maximize imports and output before the winter.   

China continues to rely on coal and coal-fired power generation to meet its growing power demand, and despite being the world's top investor in solar and wind capacity, it also plans a lot of new coal-fired electricity capacity.

During the first half of 2023 alone, China approved more than 50 GW of new coal power, Greenpeace said in a report this year. That's more than it did in all of 2021, the environmental campaign group said.  

China’s coal demand is expected to drop this year and plateau through 2026, and global demand is set to decline to 2026, “but China will have the last word,” the International Energy Agency (IEA) said in its Coal 2023 annual report.

The outlook for coal in China will be significantly affected in the coming years by the pace of its clean energy deployment, weather conditions, and structural shifts in the Chinese economy, according to the agency. 

 WW3.0

Philippines To Explore South China Sea For Oil Amid China Dispute

By Alex Kimani - Jan 18, 2024

The Philippines says it will go ahead with plans to build defense alliances with the U.S. and its Western allies in a bid to make it possible for the Southeast Asian nation to explore oil-and-gas-rich South China Sea.

“I really do think it’s quite urgent that we start now,” Philippine’s Defence Secretary Gilberto Teodoro Jnr told Bloomberg News in an interview on Wednesday in his office in Manila, adding that oil exploration is “part of the package” of the country’s strategy to protect its territory. 

Territorial disputes in the South China Sea erupted after Beijing laid a sweeping claim to sovereignty over the sea--home to an estimated 11 billion barrels of untapped oil. However, scores of countries including the Philippines, Brunei, Indonesia, Malaysia, Taiwan and Vietnam have opposed China while a 2016 international tribunal took a similar stance. 

The Philippines, which imports nearly all its fuel requirements, is desperate to find new energy sources as a key local gas field nears depletion. However, it has to contend with China which frequently deploys military ships in the contested waters.

“This could mean that they really want total domination and control over everything from free passage to resources, or they want to bear hug the Philippines to make them the sole joint venture partner in the exploration or exploitation of resources in this area,” Teodoro has said. 

Tensions between the two nations have escalated over the past year with the Philippines vowing to reject any joint exploration that fails to  recognize the nation’s right to exclusively exploit these resources.

Territorial disputes over the South China Sea date back to the 1970s when countries began to claim various zones and islands in the sea, such as the Spratly Islands, which possess rich natural resources and fishing areas. 

China maintains that foreign militaries are not allowed to conduct intelligence-gathering activities, including reconnaissance flights, in its exclusive economic zone (EEZ). 

Climate Groups Defeat Norwegian Government In Court Battle

By Alex Kimani - Jan 18, 2024

The Norwegian government has suffered a major setback in its bid to expand the country’s oil and gas production after the country’s Supreme Court ruled that three permits issued by the government to develop new offshore oil and gas fields are invalid because their environmental impact was not sufficiently assessed. 

Last year, Greenpeace Nordic and Natur og Ungdom filed a lawsuit with the Oslo District Court, seeking a temporary injunction for the three projects—Equinor ASA’s (NYSE:EQNR) Breidablikk and Aker BP’s (OTCQX:AKRBF) Yggdrasil and Tyrving in the North Sea–citing a failure by the companies and the Norwegian government to consider the full impact of the future use of all the extracted fossil fuels on the global climate. The two fields hold combined reserves of some 875 million barrels of oil equivalent.

"The court's conclusion is that the decisions on the plan for the development and operation of petroleum deposits for Breidablikk, Yggdrasil and Tyrving are invalid," said the ruling by Judge Lena Skjold Rafoss. 

"An impact assessment ensures that dissenting voices are heard and considered, and that the decision-making basis is verifiable and available to the public," it added. 

According to the court, future emissions should have been assessed as part of the approval process, in-line with its decision in the famous Norwegian Arctic Oil case of 2020. 

The Norwegian government won the case against environmental groups that wanted the courts to block the government from issuing licenses to oil and gas companies to explore the south and southeast areas of the Barents Sea for petroleum.

The latest ruling, however, makes it clear that the verdict applies to these three recently approved fields only "and not to other activity on the Norwegian continental shelf". Still, it could set a precedent for new fields.

"This is a full and complete victory for the climate over Norway," Greenpeace Norway head Frode Pleym told Reuters.

 

Infrastructure Investors Plan $163 Billion Energy Islands

By Tsvetana Paraskova - Jan 19, 2024

Denmark-based Copenhagen Infrastructure Partners (CIP), a major investor in offshore wind, said on Friday it is launching a new company to develop energy islands globally, with investments estimated at around $163 billion (150 billion euros).

CIP is launching Copenhagen Energy Islands (CEI), which is currently developing a portfolio of around 10 energy island projects around the North Sea, the Baltic Sea, and South-East Asia to scale up and integrate offshore wind energy.

Each of the 10 energy islands is estimated to cost around $1.63 billion (1.5 billion euros), for a total investment of $163 billion in the ten projects, according to Bloomberg.

Copenhagen Energy Islands is an independent company majority-owned by CIP and a group of investors. The founding group includes Nordic, European, and North American investors with a track record of investments in renewable energy infrastructure, including PensionDanmark, PFA, SEB, and Andel.

Copenhagen Energy Islands believes that the artificial energy islands – large-scale offshore energy hubs – will enable the massive scaling required for the next generation of offshore wind deployment globally.

Offshore wind had a difficult 2023, with several projects scrapped and many delayed, due to cost escalation, rising interest rates, and supply chain and turbine quality issues.

According to the newly created company, energy islands address the three main challenges to the massive build-out of offshore wind: costs, rate of deployment, and grid constraints.

“Key value drivers include a substantial reduction in power transmission costs, large-scale offshore green hydrogen production and related synergies between power and hydrogen production,” Copenhagen Infrastructure Partners said in a statement.  

“Today, the challenge for offshore wind is less about building the incremental offshore wind farm, but more how to integrate large-scale offshore wind energy into the global energy systems,” said Jakob Baruël Poulsen, Managing Partner and founder of CIP.

“We see energy islands as a key tool in solving this challenge and realizing the ambitious offshore wind targets across the globe,” Poulsen added.

IRONY

Red Tape Is Undermining European Clean Energy Projects

By Tsvetana Paraskova - Jan 19, 2024,

Clean energy projects across the EU are failing to reach completion due to red tape, Miguel Stilwell d'Andrade, the chief executive of Portugal’s biggest utility, Energias de Portugal (EDP), told Reuters at the Davos economic forum.

While the European Commission has laid the project execution and subsidy criteria at the EU level with “great vision”, “The crux is the national governments transposing them,” d'Andrade told Reuters on the sidelines of the forum in Davos. 

Red tape regarding clean energy projects, especially in green hydrogen, is holding back the industry and the EU targets, according to the executive.

“In the US, if you produce 1 kilo of green hydrogen, you get 3 dollars,” d'Andrade told Reuters.

“In Europe, I need to submit a room full of paper.”

By the time the paperwork within the European Union is processed, “the world has changed,” the executive added.

EDP’s Brazilian unit began producing green hydrogen in December 2022 in a pilot project.

In the middle of 2023, EDP said that the European Commission had selected EDP projects to receive European Union Innovation Funds. Out of 13 selected projects under the Industry Electrification and Hydrogen category, EDP won with its project GreenH2Atlantic, which will install around 100 MW of electrolyzers in Sines, and with the Asturias H2 Valley project, which will transform Spain's Aboño plant and include 150 MW of electrolyzers.

The European Union’s renewables strategy includes the ambition to produce 10 million tons and import 10 million tons of renewable hydrogen in the EU by the end of this decade.

The European Commission has outlined a 'hydrogen accelerator' concept to scale up the deployment of green hydrogen, which, the EC says, will contribute to accelerating the energy transition and decarbonizing the EU's energy system.

Industry officials believe that the EU needs to revise some provisions in the hydrogen regulation in the coming years to make Europe's hydrogen industry globally competitive.

By Tsvetana Paraskova for Oilprice.com