WWIII
How an India-Pakistan War Could Derail Central Asia’s Future

By James Durso - May 07, 2025

A war between India and Pakistan would significantly destabilize Central Asia, disrupting trade routes, delaying infrastructure projects, and increasing regional militancy.

China, Russia, and the U.S. may intensify involvement in Central Asia, leveraging the conflict to protect or expand their influence.

Potential nuclear fallout, refugee flows, and the breakdown of regional cooperation could severely impact Central Asia’s economic development, security, and food systems.


If India and Pakistan spiral into war, there will be consequences for Central Asia.

A war between Pakistan and India would likely have significant ripple effects on Central Asia, given the region's proximity to Afghanistan and flourishing economic ties across the region. The conflict could disrupt trade and energy routes, increase militancy, and draw in major powers like China, Russia, and the U.S., potentially straining Central Asian stability.

Intervention by external powers: The Central Asian republics (Kazakhstan, Uzbekistan, Turkmenistan, the Kyrgyz Republic, and Tajikistan) are already arenas for competition among outside powers. A Pakistan-India conflict could draw these powers into the region more aggressively to secure their interests, though Russia is busy in Ukraine, Turkey is busy in Syria, and U.S. forces are fighting in the Middle East, and Washington is ready to confront China.

China is an ally of Pakistan and sponsor of the $65 billion China-Pakistan Economic Corridor (CPEC). China might deepen its presence in Central Asia to secure trade routes and counterbalance India’s regional influence. This could accelerate Chinese investments in infrastructure and energy projects that will increase trade with the region that totaled $89 billion in 2023, up 27% from 2022, $60 billion of which was Chinese exports.

And China may make further inroads into the Central Asia arms market given Moscow’s need to dedicate all its resources to the Russia-NATO war in Ukraine. This will allow China to broaden its engagement beyond infrastructure projects into the security realm that, up to now, has been limited to anti-terrorism training and intelligence sharing in Tajikistan.

Russia is an ally of India, a buyer of Russian arms, having purchased $60 billion of Russian arms, 65 percent of its total weapons imports, over the past twenty years With its historical ties to Central Asia and shared membership in the Collective Security Treaty Organization (CSTO), Russia might leverage a conflict to reinforce the region’s border security, and increase intelligence sharing and security forces training.

And just in time, Russia has declared it will help the Taliban government fight the Afghan branch of the Islamic State, the Islamic State – Khorasan Province (IS-K).

The United States could focus on Central Asia to counter China and Russia, potentially increasing military or economic aid to Uzbekistan or Kazakhstan, the major economies in the region. Unlike the leaders of Russia or China, no American president has ever visited Central Asia but President Donald Trump could signal increased U.S. attention by visiting the region.

Afghanistan as a flashpoint. Afghanistan, bordering both Pakistan and Central Asia, would likely become a hotspot. The Afghan Taliban’s support for the Pakistani Taliban, the Tehreek-e-Taliban-e-Pakistan (TTP) could further destabilize Pakistan, presenting Islamabad with the prospect of a two-front war, though recent visits by Pakistan’s diplomats, and military and security officials seeking a “diplomat reboot” may be just in time to stanch action by the TTP.

Instability would come to Central Asia via Afghanistan in the form of refugees and energized militants, and economic stagnation in the delay of development projects like the Trans-Afghan railway, the Turkmenistan–Afghanistan–Pakistan–India (TAPI) natural gas pipeline, and the CASA-1000 renewable energy infrastructure construction project.

General disorder may spill insecurity into Tajikistan and Uzbekistan, where cross-border militancy (e.g., the Islamic Movement of Uzbekistan (IMU), which has pledged allegiance to al-Qaeda, and IS-K could surge.

And the instability will cause a slowdown in foreign direct investment that has steadily climbed as has foreign trade in goods and accession to bilateral investment treaties. The region’s economy suffered “lost decades” between the start of the Afghan civil war in 1992 and the end of the NATO occupation of Afghanistan in 2021 and has been making steady progress in connecting to the wider world economy; Turkmenistan and Uzbekistan are completing the World Trade Organization (WTO) accession process, and Kazakhstan and Tajikistan are WTO members.

And just in time for a war, the World Bank is predicting economic slowdown for Central Asia: Kyrgyzstan and Tajikistan will suffer pronounced declines, Kazakhstan’s decline will be less pronounced, and Uzbekistan’s growth rate will remain steady at 5.9%.

The U.S. may try to leverage disorder on Afghanistan’s border with Pakistan to pressure the Kabul government, but that risks empowering Al-Qaeda, IS-K, the hardline Taliban faction in Kandahar, or some combination of the three. Disorder in Pakistan’s Balochistan province, the poorest place in Pakistan, may energize the local separatists and draw in bordering Iran which faces a Baloch insurgence on its side of the border.

India’s Central Asian Ambitions. India’s efforts to access Central Asian and Afghan resources, via Iran’s Chabahar port, could be disrupted, forcing India to seek alternative routes or deepen ties with Russia and Iran, affecting regional alignments, and angering the U.S. which is trying to isolate Moscow and Tehran.

India imports uranium for its nuclear power program from Kazakhstan and Uzbekistan and an uninterrupted supply by the republics will be a sign to India they value their relationship with Delhi.

Trade Route Disruptions: Central Asia relies on connectivity projects like CPEC and the International North-South Transport Corridor (INSTC). A war could disrupt CPEC which links China’s Xinjiang province to Pakistan’s Gwadar port and passes through contested areas like Kashmir. India’s trade routes to Central Asia via Iran and Afghanistan could be jeopardized if conflict escalates or Afghanistan becomes unstable, though if Indian merchantmen are unmolested by Pakistan the impact may be minimized and they will be able to safely dock at Iranian ports.

Tightened border controls will hurt regional trade that was boosted by eased border controls that teased the possibility of a unified regional market, following the resolution of many territorial disputes, a process that began in earnest after the 2016 election of Uzbekistan’s president, Shavkat Mirziyoyev.

The Central Asia republics trade with India and Pakistan and will be reluctant to be drawn into one side’s economic warfare on the other. Kazakhstan, Uzbekistan, and Turkmenistan, the three largest economies in the region, all import packaged medicaments and vaccines from India and mostly food products from Pakistan, and may find it easier to replace the lower-valued agriculture products than disrupting their medical supply chain.

Pakistan and Kazakhstan recently inked a transit trade agreement that would see goods shipped from Central Asia through the Pakistani ports of Karachi, Bin Qasim, and Gwadar, and the start of direct flights between the countries. An India-Pakistan war will bring in the insurance companies who may cancel coverage to aircraft, trucks, and their cargoes, delaying the benefits of the deal.

Spillover of Militancy: A Pakistan-India war, especially if centered on Kashmir, could embolden extremist groups like Jaish-e-Mohammed or Lashkar-e-Taiba, which have historical ties to Afghan and Pakistani militants. This could inspire increased terrorist activity in Tajikistan and Uzbekistan, where groups like the IMU and IS-K could exploit regional conflict for recruitment and radicalization.

Nuclear Risks: Both nations possess nuclear arsenals, less than 200 weapons each. Even a limited nuclear exchange could cause dire environmental and climatic effects, disrupting Central Asian agriculture and food security, and pretty much eliminating agriculture exports as customers fret about “contamination,” despite the prevailing westerly winds. In Uzbekistan, agriculture contributes about 25% to the Gross Domestic Product and employs about a quarter of the workforce, so the economic (and political) impact would be profound.

Conflict in Pakistan or Afghanistan could drive refugees into Central Asia, particularly Tajikistan, straining resources and sparking ethnic tensions, and destabilizing resource-strapped governments.

India and Pakistan are members of the Shanghai Cooperation Organization (SCO), as are several Central Asian states, and China and Russia. A war could paralyze SCO initiatives, hindering regional security and economic cooperation. Tensions might also exacerbate India-China rivalries within the SCO, affecting Central Asia’s balancing act.

Specific Impacts on Central Asian States

Tajikistan shares a porous border with Afghanistan, making it vulnerable to militancy and refugee inflows. India’s military training programs with Tajikistan could be disrupted, and its newly-refurbished (by India) Ayni Airbase base may worry Pakistan.) As a regional leader, Uzbekistan might seek to strengthen ties with Russia and China to counter instability, however, its trade with South Asia could suffer. Neutral but energy-dependent, Turkmenistan could benefit from Chinese energy demand. As the major Central Asia economy, Kazakhstan might leverage its SCO and Eurasian Economic Union ties to mitigate disruptions but could face energy market volatility. Kyrgyzstan is economically fragile and be hit hard by trade disruptions increasing reliance on China or Russia.

Long-Term Implications

Regional Polarization: Central Asia could become more divided, with some states aligning with China (e.g., Turkmenistan) and others with Russia or the West (e.g., Kazakhstan, Uzbekistan), hindering regional unity, which may be in the interests of Washington, Beijing, Brussels, or Moscow.

Securitization: Fear of spillover could lead Central Asian states to increase security spending, diverting resources from economic development. More than half of Central Asia’s population is under 30 years of age and they have high expectations that governments are trying to satisfy by increasing educational and economic opportunity, and diversifying the economies away from agriculture and natural resource extraction, and towards technology, services, and tourism. And more security may come at the expense of civil rights.

Environmental Fallout: A nuclear conflict, even limited, could cause global climate disruptions, devastating Central Asia’s agriculture-dependent economies.

Conclusion

India has been active in Central Asia with its Connect Central Asia Policy, which aims to enhance trade, connectivity, and diplomatic engagement, and hinges on India’s development of Chabahar port in Iran, though the Trump administration rescinded the sanctions waiver on Chabahar. Washington’s fixation on Iran, specifically ruining its economy to press it for a favorable nuclear deal, may see India and Central Asia as collateral damage.

The republics import higher value goods from India (Packaged Medicaments) than they do from Pakistan (food products), and sell uranium – a strategic good – to India. India has a larger market than Pakistan and is a provider of technology products that Pakistan cannot match, and the republics’ future is with India, though they have no reason to antagonize Islamabad.

A Pakistan-India war would destabilize Central Asia by disrupting trade, fueling militancy, and intensifying great power rivalries. The region’s proximity to Afghanistan and reliance on connectivity projects make it particularly vulnerable. Central Asian states would face economic strain, security threats, and pressure to align with external powers, potentially fracturing regional cooperation. The nuclear risk underscores the catastrophic potential, with global climatic effects threatening Central Asia’s food security and economic stability. To mitigate these risks, Central Asian states might pursue neutrality, strengthen SCO ties, or seek mediation roles, but their limited clout may constrain effective responses.


By James Durso

UK's Harbour Energy To Slash 250 Jobs

By City A.M - May 07, 2025

• Harbour Energy is set to axe 250 jobs in Aberdeen.
• 
  
• The company blamed the Energy Profits Levy and a challenging regulatory environment for the decision.
• 
  
• The tax was hiked to 78 per cent by Chancellor Rachel Reeves as part of the Autumn Budget last October.
• 
  

Harbour Energy has slammed the government’s “punitive fiscal position” as it announced plans to cut 250 jobs in Aberdeen.

The London-listed company, which is the largest oil and gas producer in the North Sea, blamed the Energy Profits Levy and a challenging regulatory environment for the decision.

It also noted delays in the ramp-up of carbon capture projects in the UK.

The Energy Profits Levy, also known as the windfall tax, was first introduced in 2022 under Boris Johnson’s government and imposed a 75 per cent tax on oil and gas producers.

The tax was hiked to 78 per cent by Chancellor Rachel Reeves as part of the Autumn Budget last October.

Scott Barr, Harbour’s UK managing director, said: “Harbour is launching a review of its UK operations, which we expect to result in a reduction of around 250 onshore roles in our Aberdeen-based business unit.

“The review is unfortunately necessary to align staffing levels with lower levels of investment, due mainly to the government’s ongoing punitive fiscal position and a challenging regulatory environment.

He added: “We are also reviewing the resourcing required to support our Viking carbon capture and storage project, where progress beyond front-end engineering design and the recent securing of a Development Consent Order has been hindered by repeated delays to the Government’s Track 2 process.”

Habour’s decision was described as a “devastating blow” by the Aberdeen and Grampian Chamber of Commerce (AGCC).

It follows the slashing of some 350 of its UK onshore jobs in 2023.

By Guy Taylor via CityAM

Oil-Rich Alberta Could Vote to Separate from Canada

By Tsvetana Paraskova - May 07, 2025

Alberta’s Premier Danielle Smith has opened the door to a 2026 secession vote.

Smith has launched an ‘Alberta Next’ initiative to push back against federal policies seen as hostile to the province’s energy industry.

The debate comes amid rising tensions with Ottawa and Trump’s renewed talk of a U.S.-Canada “merger”, despite Canada supplying nearly half of U.S. crude imports.






Alberta could vote next year on whether to separate from Canada if a citizen-led petition gathers the requisite number of signatures requesting such a question to be put to a referendum.

That’s what Danielle Smith, the Premier of the Alberta province, which is the heart of Canada’s oil industry, said this week, just after the Liberals led by Mark Carney won the federal election and ahead of Carney’s meeting with U.S. President Donald Trump in the White House.

Smith stressed that the provincial government itself would not be seeking a referendum on an Alberta secession.

“To be clear from the outset, our government will not be putting a vote on separation from Canada on the referendum ballot; however, if there is a successful citizen-led referendum petition that is able to gather the requisite number of signatures requesting such a question to be put to a referendum, our government will respect the democratic process and include that question on the 2026 provincial referendum ballot as well,” Smith said.

The government of Alberta will create an ‘Alberta Next’ panel aimed at protecting the province from “any current or future hostile policies of the federal government,” including attempts to block Alberta’s resource development.


Following the federal election, Alberta will take steps to protect itself from overreaching federal policies and will pursue a new ‘Alberta Accord’ within Canada, require Alberta’s consent on any export restrictions of Canadian resources, and demand guaranteed port access for Alberta energy and resources, Smith said.

Related: U.S. Freeport LNG Export Plant Set to Resume Service After Outage

The premier reiterated that “I do not support Alberta separating from Canada. I personally still have hope that there is a path forward for a strong and sovereign Alberta within a United Canada.”

“So I am going to do everything within my power to negotiate a fair deal for Alberta with the new Prime Minister,” Smith noted.

For years, Alberta has been opposing federal legislation regarding emissions and resource development. Alberta has been fighting the federal government on the plan to cap emissions from oil and gas production, which the province and the industry see essentially as a cap on output.

Analysts are skeptical about whether citizens in the province will gather enough signatures to include a vote on separation in a referendum.

“These grievances are serious,” John Soroski, a political scientist at MacEwan University in Edmonton, told Associated Press.

“I think the prospects of separation are highly unlikely.”

The issue of a possible referendum on Alberta's separation was raised hours before the newly elected Canadian Prime Minister Mark Carney headed to the U.S. to meet with President Trump.

The meeting appeared friendlier than many expected, although Trump once again raised the proposal of a “wonderful marriage” of incorporating Canada into the U.S.

Carney firmly rejected the marriage proposal with a carefully worded reply, “As you know from real estate, there are some places that are never for sale,” and likened Canada to the Oval Office and to Britain's Buckingham Palace.

“Having met with the owners of Canada over the course of the campaign in the last several months, it's not for sale. Won't be for sale, ever.”

Before the meeting, President Trump took to his Truth Social platform to express his frustration with the U.S. trade deficit with Canada.

“We don’t need their Cars, we don’t need their Energy, we don’t need their Lumber, we don’t need ANYTHING they have, other than their friendship, which hopefully we will always maintain,” President Trump wrote on Tuesday, referring to Canada.

But the fact is that the U.S. needs Canada’s energy, especially its crude oil, which is being refined in many refineries in the Midwest and on the Gulf Coast. Canada is the single biggest crude oil supplier to the United States, accounting for about 50% of U.S. gross petroleum imports with volumes of more than 4 million barrels per day (bpd).
The U.S. trade deficit with Canada jumped to $4.9 billion in March 2025, sharply higher compared to previous months, data from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis showed on Tuesday.

It was higher imports of cars, crude oil, and finished wood products – goods that Trump claims the U.S. doesn’t need from Canada – that pushed up the U.S. deficit with its neighbor to the north.

By Tsvetana Paraskova for Oilprice.com

 

EU Seeks to Simplify Energy Laws

By Tsvetana Paraskova - May 08, 2025

• The EU plans to simplify energy laws to reduce bureaucracy and enhance competitiveness.

• Streamlined regulations are expected to ease burdens on energy-intensive industries while maintaining decarbonization goals.

• Final decisions are pending discussions ahead of the EU energy ministers' summit in June.

The European Union member states are looking to include energy laws and regulations in wider efforts to cut bureaucracy aimed at boosting the bloc’s competitiveness, a draft document seen by Reuters showed on Thursday.

Earlier this year, the European Commission proposed measures to cut red tape and simplify legislation for EU businesses and citizens. The plans to simplify rules “is a major step forward in creating a more favourable business environment to help EU companies grow, innovate, and create quality jobs,” the Commission said at the end of February.

“EU companies will benefit from streamlined rules on sustainable finance reporting, sustainability due diligence and taxonomy. This will make life easier for our businesses while ensuring we stay firmly on course toward our decarbonisation goals. And more simplification is on the way,” European Commission President Ursula von der Leyen said at the time.

European competitiveness has been eroded in recent years by volatile and high energy prices, which are up to five times higher than those in the United States and China. The new tariffs from the U.S. are also hitting major European industries. Some European facilities face an existential threat after years of trying to cope with the high energy costs.  

Now, the EU countries are considering extending the simplification to other EU laws, according to the draft conclusions in the document ahead of an EU energy ministers’ summit in the middle of June.

If energy laws are simplified, too, it “is expected to have a profound impact on lowering the regulatory burden for companies in the energy sector and energy intensive industries while maintaining alignment with the original policy objectives,” per the document seen by Reuters.

This isn’t the final draft ahead of the energy ministers’ summit next month. Diplomats from the EU member states continue discussions about which areas should see laws simplified.  

By Tsvetana Paraskova for Oilprice.com

WWIII

Taiwan's Energy Crisis Could Prove to Be Existential

By Haley Zaremba - May 08, 2025

• Taiwan's isolated energy grid is heavily dependent on fossil fuel imports, leaving it highly vulnerable to blockades.

• Chinese military exercises have targeted potential energy disruptions, signaling the strategic importance of Taiwan's power supply.

• Taiwan's energy insecurity threatens not only its own economy but also global semiconductor production, sparking concerns of a broader conflict.

Taiwan is walking an energy tightrope. The island nation’s isolated energy grid supports a population the size of Australia’s at 23 million and one of the most advanced and energy-intensive tech sectors in the world. And not only is it being pushed to its absolute limit by economic factors, it’s also facing an existential threat from potential Chinese aggression. 

“As the age of energy-hungry artificial intelligence dawns, Taiwan is facing a multifaceted energy crisis: It depends heavily on imported fossil fuels; It has ambitious clean energy targets that it is failing to meet; And it can barely keep up with current demand,” Yale360 reported in September of last year. “Addressing this problem, government critics say, is growing increasingly urgent.”

On top of these issues, China has been ramping up military exercises off the coast of Taiwan, running simulations of live-fire strikes on ports and energy facilities, and setting up blockades on vital shipping routes to and from the sovereign island. Such blockades, if carried out, would be devastating to the island’s energy security. "People would run out of power and water, as the water supply is powered by electricity. Communication is based on electricity, and the military would not be able to function," James Yifan Chen, a scholar of international relations, recently told DW.

The Chinese government views Taiwan as a breakaway territory and wants to unify the island with mainland China under its One China policy, by force if necessary, even though the People’s Republic of China has never governed Taiwan. Tensions between Taiwan and China have been escalating in recent years, and experts fear that they could soon come to a head. And in the case that China does carry out a full-on invasion of Taiwan, the island’s energy supply will be its first target.

"Taiwan is more vulnerable than Ukraine," says Chen. This is because of the isolated nature of the island’s grid – Taiwan has no neighboring grids to turn to in a time of crisis, and has extremely limited fuel storage capacity. The most optimistic outlooks estimate that Taiwan’s gas reserves would last for just 40 days under a full Chinese blockade. Other estimates say that the reality is closer to two weeks.

Taiwan’s energy supply is its “Achilles heel of national security,” according to the French Institute of International Relations (IFRI). “Aware of the challenge, the Taiwanese government is working to strengthen its energy independence, for example by encouraging the development of renewable energies, diversifying fossil fuel suppliers, increasing fuel storage capacities, and enhancing the security of the power grid,” says IFRI. “However, the government struggles to formulate an energy policy that explicitly aligns with national security needs.”

This could mean doomsday for the nation’s economy. After Taiwan’s presidential elections last year, the Chinese military conducted a series of military exercises with the objective of making Taiwan a “dead island” via a blockade for the “disruption of energy supplies” leading to an “economic collapse,” according to Colonel Zhang Chi of the People’s Liberation Army and professor at the National Defense University in Beijing. 

An attack on Taiwanese energy would not only be devastating for the people of Taiwan. It would also have reverberating effects on the rest of the world. Taiwan is the world leader in the semiconductor industry and is responsible for a whopping 68% market share of global chip production. Just one company, the Taiwan Semiconductor Manufacturing Company (TSMC), produces at least 90% of the world’s most advanced computer chips.

Furthermore, a Chinese attack on Taiwan’s energy grids could lead to far-reaching conflict. The Council on Foreign Relations warns that “many foreign policy analysts fear a Chinese attack on Taiwan could draw the United States into a massively destructive and costly war with China.”

By Haley Zaremba for Oilprice.com

 

Southeast Asia Picks Gas Over Green Hype as Power Demand Surges

By Irina Slav - May 07, 2025

• Natural gas is gradually going to overtake coal and crude oil as the biggest source of primary energy in Southeast Asia.
• Demand for electricity has been on a strong rise in the region.
• Wood Mackenzie: The region will be a net importer of liquefied natural gas by 2032.

Natural gas is gradually going to overtake coal and crude oil as the biggest source of primary energy in Southeast Asia, with a share of 30% by 2050. This is according to a new Wood Mackenzie report, which has become the latest to admit the inevitable: hydrocarbons will be around for much longer than transition advocates want.

Currently, Southeast Asia is partial to coal-powered generation thanks to abundant local resources and price considerations. Also, demand for electricity has been on a strong rise in the region, prompting more coal power plant construction alongside transition buildouts of wind and solar.

Vietnam is a case in point. In recent years, soaring industrial activity and economic growth well above the global average have made the country a power-hungry, predominantly manufacturing economy. Vietnam has become a solar power leader among the countries in Southeast Asia, but it continues to rely on thermal coal for industry and is one of the few countries worldwide building new coal-fired power capacity.

At the same time, Vietnam, like its neighbors, is building a lot of wind and solar. The problem with wind and solar, as recently so brilliantly illuminated by Spain and Portugal, is that they need baseload generation as backup and as a source of reliable electricity. According to Wood Mackenzie, this source is going to shift from coal to natural gas, demand for which the consultancy sees growing at a compound annual growth rate of 3.1% until 2035.

With demand, generation capacity will grow, too, substantially. Wood Mac sees this growth twofold over the next two decades and a half, while consumption expands by 89.5%. If anything, this is further proof that growing economies need reliable, dispatchable energy to keep remain on the growth path.

As the head of gas and LNG research at Wood Mac, Johnson Quadros, put it, “the surge in gas demand is driven by the region’s rapidly growing economies, data centres expansion, the intermittent nature of renewable energy, and the ongoing transition from coal to gas power. However, the region faces challenges in meeting this demand through domestic production alone.”

Indeed, the surge in gas demand that Wood Mac and others predict for Southeast Asia—and Asia as a whole—will cause a deeper dependence on imports because the region cannot cover its consumption locally. Indeed, transition outlet Global Energy Monitor has forecast the need for an 80% increase in LNG import capacity in Southeast Asia if natural gas demand continues to grow as strongly as it is growing currently.

Wood Mackenzie agrees, predicting the region will be a net importer of liquefied natural gas by 2032, with demand for the superchilled fuel rising by a whopping 182% over the next ten years, featuring some of the fastest national demand growth rates in the world. This will provide a massive boost for local production of natural gas.

“As domestic gas demand rises and energy security becomes an increasing concern, Southeast Asian countries—particularly Indonesia and Malaysia— shift their focus toward boosting domestic production,” principal research analyst Raghav Mathur said. He added that new developments will sustain local gas production into the 2030s but by the end of that decade, demand growth will overwhelm domestic supply capabilities, prompting new frontier exploration to offset natural field decline.

The supply problem with gas, however, may turn out to be larger than just Southeast Asia. The International Gas Union last year warned that “Should gas demand continue to grow as in the last 4 years, without additional production development, a 22% global supply shortfall is expected by 2030.”

Taken together with Wood Mac’s new report, this means that expectations of a gas glut on a global scale are quite premature, and not only because building all that LNG capacity that is supposed to tip the world into an oversupply is taking longer than forecasters assumed it would. Morgan Stanley last year noted there was 150 million tons per year in new LNG capacity under construction, with its analysts saying “We expect gas market oversupply to reach multi-decade highs over the coming years.” It seems they did not pay attention to Asian demand trends—and not just Asian, either.

Natural gas acquired a reputation for being a so-called bridge fuel between the oil age and the transition age. Then this reputation became the target of numerous attacks from pro-transition organizations on the grounds that although cleaner-burning than coal and oil, gas was still a hydrocarbon and, as such, evil. Indeed, some went as far as to produce research, claiming it was actually dirtier than coal. Now, gas is reasserting itself as a cleaner-burning alternative to coal—at a price. It is the price issue that could interfere with the bright prospects of gas demand and keep coal dominant for longer. A growing economy needs reliable energy if it wants to keep growing.

By Irina Slav for Oilprice.com

UK Net-Zero Goal at Risk as Ørsted Cancels Offshore Wind Project

By City A.M - May 08, 2025

Ørsted has paused its major Hornsea 4 offshore wind project due to rising costs, interest rates, and supply chain issues.

The decision adds to a series of recent setbacks in the UK’s renewable energy sector.

While government officials insist the 2030 goal remains achievable, experts say Hornsea 4 could still go ahead later.



There are growing doubts over the government’s ability to meet its net zero targets after the company behind one of Britain’s biggest-ever wind farms abruptly pulled the plug on the project, citing overwhelming cost pressures.

Denmark-based Ørsted, which won the contract to develop the 2.4GW Hornsea 4 offshore windfarm last year, said it took the decision due to “supply chain costs, higher interest rates, and an increase in the risk to construct and operate Hornsea 4 on the planned timeline.”

The move marks the latest blow in a bruising week for the UK’s energy industry following an announcement by power firm Drax that it would pause a major expansion of its Scottish hydro-power plant. Last week, FTSE 100 giant ABF said it would mothball a bioethanol plant in Yorkshire, accusing the government of “undermining” its viability, while on Wednesday oil and gas firm Harbour Energy said it would cut 250 jobs in Aberdeen, slamming “the government’s ongoing punitive fiscal position and a challenging regulatory environment.”

Ørsted’s decision to shelve Hornsea 4 piled further pressure on Energy Secretary Ed Miliband, who is spearheading a target of cleaning up UK power by 2030. But his net zero policies have faced increasing political backlash amid rising household bills and job loss fears.Related: OPEC+ Overproducer Kazakhstan Will Not Cut Oil Output in May

Shadow Energy Secretary Andrew Bowie said the project’s discontinuation “took the Ed Miliband – already mad – target of getting to clean power 2030, and left it in tatters.

“There is absolutely no way that without Hornsea they can make clean power 2030… Ed Miliband needs to revisit whether or not clean power 2030 is still realistic,” Bowie told City AM.

Bowie said Ørsted’s decision “raised questions” over whether the contracts for difference process, a scheme set up by the previous government to fund renewable energy infrastructure, was “fit for purpose.”

“If Ørsted are able to renege on commitments made in previous auction rounds, it seems to me like they’re trying to game the system,” said Bowie. “All of this will have an impact on bill-payers, because they are paying for these projects. So we need to examine whether or not any monies that have already been parted with need to be recouped.”

A Department for Energy Security and Net Zero (DESNZ) spokesperson said: “We recognise the effect that globally high inflation and supply chain constraints are having on industry across Europe, and we will work with Ørsted to get Hornsea 4 back on track.”
Supply chain hit

Sam Alvis, head of energy security and environment at the Institute for Public Policy Research, said, Ørsted’s issues speak to “massive supply-side constraints,” something which has “hit offshore wind like it has hit many other industries.”

Alvis warns some components necessary for wind turbine production won’t be available until the mid-2030s: “the order books are full, the supply chain components aren’t there.”

The hit to suppliers by the cancellation of Hornsea 4 could exacerbate the industry’s supply-side squeeze, he added.

However, Ørsted’s experience might not be indicative of how other companies perform, as its woes span back some time.

Alvis pointed to “a difficult couple of years” where “they’ve had challenges in the East Coast of America,” including nixing two of their projects there. Their share price dropped by 40 per cent, so “their risk tolerance is in a different place to a lot of other offshore wind developers, which is why you’ve seen them pull this project and not yet any other developers who still have that background level of capital and the risk appetite commensurate with what they bid for.”
Project could still return

DESNZ has insisted that its clean power 2030 mission is safe. The department said in a statement: “We have a strong pipeline of projects to deliver clean power by 2030 and our mission-led approach ensures we can steer our way through global pressures and individual commercial decisions to reach our targets.”

“It’s definitely a setback, but it is not an immeasurable or impossible to fix one,” said Alvis, pointing to the fact that “in the next allocation round, we are looking at procuring upwards of 20 gigawatts.”

Dr Simon Cran-McGreehin, Head of Analysis at the Energy & Climate Intelligence Unit (ECIU) is convinced that the Hornsea 4 project will be revived, not least because of the costs that have been sunk into it. “They haven’t said they’re scrapping. They’re putting on hold. So much work has gone into it, and so much invested in terms of money, but also will and potential, that it’s likely to go ahead … it’s a question of exactly when, and exactly how quickly.”

Cran-McGreehin said problems with the project didn’t yet spell a death knell for the clean power 2030 mission, as there’s enough on the cards to go off: “there is time, and the amount of renewables in the pipeline that are near the end of the process [and] almost ready for construction – once they get a contract in place, there’s substantial amount there.”

Ørsted has been approached for comment.

By Fonie Mitsopoulou and Guy Taylor via CityAM

Orsted Warns Offshore Wind Continues To Face Challenges

By Tsvetana Paraskova - May 07, 2025

• Orsted’s core earnings, or EBITDA excluding new partnerships and cancellation fees, rose by 14% from a year earlier to $1.31 billion.
• 
  
• Orsted confirmed its full-year EBITDA and investment guidance for 2025, but warned that the near-term prospect for the offshore wind industry have become increasingly challenging.
• 
  
• Ørsted reiterated its confidence in the offshore wind industry in the long term, but short-term prospects have deteriorated, due to higher costs and increased regulatory risks.

Despite posting consensus-beating core earnings for the first quarter, Orsted, the world’s biggest offshore wind project developer, on Wednesday warned of a continued challenging environment for the industry with mounting near-term headwinds.

“The offshore wind industry is challenged in the short term with headwinds relating to supply chain, regulatory, and macroeconomic developments,” Orsted said in its Q1 results release today.

“We are following the developments in the regulatory landscape closely and continuously assess any potential impacts hereof,” the company added.

Orsted’s core earnings, or EBITDA excluding new partnerships and cancellation fees, rose by 14% from a year earlier to $1.31 billion (8.6 billion Danish crowns), beating a company-provided consensus estimate of $1.21 billion (8 billion crowns).

Orsted confirmed its full-year EBITDA and investment guidance for 2025, but warned that the near-term prospect for the offshore wind industry have become increasingly challenging.

Due to higher costs and interest rates, the company announced today it had decided to discontinue the development of the Hornsea 4 offshore wind project in the UK in its current form, ahead of the planned final investment decision (FID) later this year.

“The combination of increased supply chain costs, higher interest rates, and increased execution risk have deteriorated the expected value creation of the project,” said Rasmus Errboe, Group President and CEO of Ørsted.

“The adverse macroeconomic developments, continued supply chain challenges, and increased execution, market and operational risks have eroded the value creation,” Errboe added.

Ørsted reiterated its confidence in the offshore wind industry in the long term, but short-term prospects have deteriorated, due to higher costs and increased regulatory risks.

Case in point—last month, the U.S. Department of the Interior ordered the suspension of construction works at Equinor’s Empire Wind offshore project in New York, saying the project may have been approved by the previous administration without an appropriate environmental assessment.

Equinor is considering its legal options after the Trump Administration ordered its major offshore wind project off New York halted, the Norwegian energy major’s chief executive, Anders Opedal, said last week.

“We have invested in Empire Wind after obtaining all necessary approvals, and the order to halt work now is unprecedented and in our view unlawful,” Opedal said in the company’s press release on the Q1 earnings.

By Tsvetana Paraskova for Oilprice.com

Is It Time to Unlock the Great Lakes' Wind Power Potential?

By Haley Zaremba - May 07, 2025

• Ontario's moratorium on offshore wind, established in 2011, remains a major barrier despite Canada's favorable wind energy policies.

• Public distrust and political opposition in both Canada and the United States are significant hurdles to offshore wind expansion.

• The Great Lakes could generate over 150 GW of fixed and 415 GW of floating turbine power, potentially surpassing Ontario's entire electricity needs.

“Wind turbines in the Great Lakes have the potential to produce huge amounts of clean energy in one of the most populated regions in North America,” states a recent article by the Canadian Broadcasting Company. But it remains highly uncertain if that dream could become a reality anytime soon. Offshore wind energy development is facing major headwinds in the United States and Canada thanks to a mix of public and political opposition. Wind energy proponents argue that this has to change for the sake of energy security and climate concerns. 

Canada has historically had a very favorable policy atmosphere for wind energy. As of 2022, the nation was a top-ten producer of wind energy on a global scale. For this reason, it came as a bit of a shock when Ontario, the nation’s most populous province, declared a moratorium on offshore wind in 2011 – a moratorium which still stands. At the time, Energy Minister Brad Duguid reasoned that "Fresh water wind turbines are something that's relatively new, and the Ministry of the Environment needs a level of comfort on the science before they can approve any further consideration of them."

But the Canadian Broadcasting Company contends that the primary reason for the moratorium was public distrust and anti-wind sentiment from local communities, a growing issue in renewables expansion across North America. “Anti-wind opposition has only grown in the last decade, and you can see that very clearly in the trend line of the paper,” Leah Stokes, associate professor of environmental politics at the University of California, Santa Barbara, told CNN in 2023. Stokes conducted a study that found that only about one in ten wind projects in Canada and the United States faced opposition in the early 2000s. “By the end of this period, before the Trump era, the average rate is more like one in five,” she said.

Opposition is also growing sharply in political spheres, with the United States’ President Trump leading an anti-wind movement, calling for "a policy where no windmills are being built” and making outlandish and false claims to slander the sector, including the noise from wind turbines causes cancer. The Trump administration is currently being sued by 17 states and Washington, D.C., for halting wind power projects. And, ironically, Trump’s energy policy might end up giving wind energy a boost – in Canada, that is.

Although Ontario’s moratorium on offshore wind is still in place, “the Ontario Clean Air Alliance thinks it's time to reconsider,” says the Canadian Broadcasting Company, “arguing offshore wind could end the province's reliance on natural gas imports from the U.S. for its gas-powered generators at a time when the U.S. threatens Canada with punishing tariffs and talk of annexation.”

"Given that we're in a sovereignty crisis and affordability crisis and a climate crisis," said Jack Gibbons, the chair of the Ontario Clean Air Alliance, "this is a solution that can address all three of those crises and we should just be moving forward as quickly as possible."

A 2023 report by the United States’ National Renewable Energy Laboratory (NREL) found that the Great Lakes could house 150 GW of fixed and 415 GW of floating turbines. Furthermore, Gibbons says that wind power in the Great Lakes could provide more than 100% of Ontario’s total electricity needs, and at a cost lower than that of the four nuclear plants that the province is currently building. However, the cost of offshore wind production remains a challenge for the sector.

The cost of deploying wind energy has dropped dramatically on land as technologies have advanced, becoming “one of the lowest-priced energy sources available today” according to the United States Department of Energy. However, offshore wind is another story, especially in North America. Faced by enormous regulatory delays, supply chain issues, and high interest rates, offshore wind faces considerable financial hurdles – but building in the Great Lakes could actually be easier than building in the oceans, where waves, salt, and costly ocean leases create problems for permitting, construction, and maintenance. 

By Charles Kennedy for Oilprice.com

WAIT,WHAT?!

U.S., Russia In Quiet Talks to Bring Russian Gas Back to Europe

By Charles Kennedy - May 08, 2025

U.S. and Russian officials are quietly exploring pathways to restore Russian natural gas flows to Europe—an initiative that, if realized, would mark a seismic shift in post-Ukraine war energy dynamics, according to an exclusive report by Reuters on Thursday. 

The talks, still in preliminary stages, are reportedly linked to ongoing peace negotiations and could involve U.S.-backed intermediary arrangements to facilitate pipeline transit through Ukraine or even Nord Stream infrastructure, Reuters reported.

Europe's Russian gas dependency collapsed from 40% to just 19% after the 2022 invasion, slashing Gazprom’s export volumes and forcing Europe into LNG deals at premium prices.

Yet now, with gas prices stabilizing and European voters balking at inflation, energy pragmatism may be edging out geopolitics.

The exclusive Reuters report comes just two days after the European Commission published a roadmap of its plans to end European dependency on Russian gas, which would ban imports of all Russian gas and LNG to EU member states by the end of 2027. Legislative proposals related to this ban will be tabled in June. 

"No more will we permit Russia to weaponise energy against us... No more will we indirectly help fill up the [Kremlin's] war chests," European Commissioner for Energy Dan Jorgensen said in a news conference in Strasbourg on Tuesday, as reported by the BBC. 

That roadmap and subsequent statements prompted Kremlin spokesperson Dmitry Peskov to respond to Reuters on Tuesday, saying the move would represent Europe “shooting itself in the foot”. 

There has been a fair amount of skepticism as to how effectively Europe could cut off Russian gas entirely. In April, the EU was reported to be considering declaring a force majeure to negate natural gas supply contracts with Russian Gazprom, without huge penalties. However, this could prove legally challenging due to the fact that this move was not taken three years ago, when Russia first invaded Ukraine.

At the same time, Ukraine has ratified a strategic minerals deal with the U.S., giving American firms priority access to lithium, titanium, and rare earths—crucial inputs for defense and green tech. The deal includes a reconstruction fund, tying resource extraction to long-term rebuilding and Western alignment.

From a market perspective, this is classic high-stakes chess where energy, capital, and geopolitics collide. The possibility of Russian gas reentering Europe would ripple through global LNG pricing and threaten U.S. export competitiveness.

Meanwhile, the minerals pact gives U.S. investors a long-term stake in one of the few growth narratives still standing in Eastern Europe.

These are not isolated headlines—they’re signals of a shifting energy order, which will require investors to pay close attention to where the flows start to move again, and where the capital will follow.  

By Charles Kennedy for Oilprice.com

 

How Turkey Could Thwart the EU's Plan to Ban Russian Gas

By Irina Slav - May 08, 2025

• The European Union aims to cut all Russian natural gas imports by 2027, but Turkey's growing role as a gas hub could complicate this effort.

• Hungary and Slovakia continue to import Russian gas through the TurkStream pipeline, boosting dependency despite EU intentions.

• Turkey's plans to replace Ukraine as a transit route could extend Russia's gas influence in Europe, challenging Brussels' energy goals.

The European Union wants to quit all forms of Russian energy imports by the end of 2027. The EU has spoken a lot about this, but action has been mostly absent, with Russia still the second-biggest supplier of gas to the bloc. Now, a non-EU country’s gas ambitions could make Brussels’ task of quitting Russian gas even harder.

The European Commission this week announced plans to bring Russian natural gas imports to zero. This will, apparently, happen by the central government of the EU banning member states from signing new supply contracts with Gazprom while looking for a way to also get them out of existing contracts without having to pay penalties for breaching these contracts.

The first problem with this is that not all EU members are on board with the idea. Hungary and Slovakia are, in fact, very much opposed to the idea, arguing it would further compromise the competitiveness of European businesses for reasons relating to costs. Now, the Commission could get the two into line by adopting the plan with a qualified, rather than a full majority of member states. What it can’t do, however, is stop Turkey from turning into a gas hub, featuring a lot of Russian gas.

Hungary and Slovakia are currently getting their Russian natural gas supply via the TurkStream pipeline that runs under the Black Sea to Turkey and then on to Eastern Europe. According to one Bulgarian energy analyst from the progressive think-tank Center for the Study of Democracy, the existence of this pipeline can prolong the European Union’s reliance on Russian gas. Indeed, it has already increased Russian gas imports to Central and Southeastern Europe from some 30% back in 2021 to over 50% as of last year, Martin Vladimirov wrote in an op-ed for Reuters.

Tukey imports a lot of Russian gas. It uses some of it at home and exports the rest to Southeastern Europe. Turkey also has plans to become a major regional natural gas hub, both via imports from Russia and Central Asia, and through local exploration and production. The Turkish government has also made public plans to essentially replace Ukraine as a key transit route between Russia’s gas fields and European consumers.

According to figures cited by the Center for the Study of Democracy’s Vladimirov, Hungary is the biggest importer of TurkStream gas, with flows expected to reach 8 billion cu m this year. That’s up from 6 billion cu m in 2023. Slovakia, meanwhile, plans to ramp-up gas flows via the pipe by amending its long-term contract with Gazprom. Other countries getting gas from the TurkStream pipeline include Bulgaria, which is part of the transit route, Serbia, Romania, and some Western Balkan states.

Now, Vladimirov argues that these flows can be replaced entirely with liquefied natural gas. He does acknowledge, however, that this would come at a price, and it is not an insignificant price. This is what makes stopping Russian gas imports so difficult and what, combined with the presence of the TurkStream pipeline and Turkey’s LNG import terminals, suggests any attempt to bring those Commission plans to fruition is doomed. Because even if Brussels somehow bans Hungary and Slovakia from buying their gas from whoever they please, it would likely still continue to utilize Turkey as a middleman in gas supply—and gas molecules don’t come with a stamp of origin. The gas that the EU imports from Turkey in the future may be coming from Central Asia, but it may also come from Russia, despite any forceful measures to make sure this doesn’t happen. Just like it happened with oil and imports from India replacing imports from Russia itself.

By Irina Slav for Oilprice.com