PAST NEWSLETTERS

Main Takeaways for the week of February 16, 2022

Some indications that Russia may accept a diplomatic solution over Ukraine, though troops remain at the border. Shutdown of Ambassador Bridge may reduce Canada’s credibility as a reliable trading partner. France planning massive nuclear power expansion. High oil prices are hurting refiners and consumers in South Korea. Israel continues diplomatic successes with Arab states at EGYPS. Natural gas restraints led New England to burn oil to meet much of its electricity needs. Coal and metals miners are making a killing due to shortages. 

Featured Article

 “Canada critical to helping ensure global supply chain security”, by CGAI Fellow Stephen R. Nagy for The Japan Times

Upcoming Event

Electric Vehicle Cybersecurity and Grid Vulnerability

Wednesday, February 16th at 1300 ET – 1100 MT

Moderator Ken Barker (University of Calgary) speaks with Mitra Mirhassani (University of Windsor), Kristen Csenkey (Canadian Global Affairs Institute), and Mohammad Ali Sayed (Concordia University) about the cybersecurity challenges of modern electric vehicles, and how they intersect with vulnerabilities in charging infrastructure and the electrical grid.

Register now: https://us02web.zoom.us/webinar/register/WN_5-TC02piRXijoZlholtQ1Q 

Headlines

Global Petroleum Liquids

• Refinery closures during the first months of covid-19 have resulted in too little refining capacity to meet diesel demand
• IEA February Oil Market Report includes major upward revisions to Saudi Arabia LPG consumption and Chinese petrochemical consumption
• Iran and U.S. very close to a JCPOA deal, which could bring 700k bpd of oil back into the market
• South Korea may release crude oil from strategic reserves to help struggling refineries and consumers handle high global prices
• Number of DUC wells in the U.S. continues to decline

Global LNG 

• European natural gas prices fall sharply on potential diplomatic solution to Ukraine crisis

Global Coal

• S. coal producer Peabody Energy Corp reaping huge profits from high thermal coal prices

North American Energy Infrastructure

• Blockade of Ambassador Bridge ends, but full impact may include a downgrade of Canada’s reputation as a reliable trade partner

U.S. - China Energy Relations

• Massive growth in LNG supplies from the U.S. will give China huge heft in spot LNG markets

EU – Russia Energy Relations

• Russia sends signals that a diplomatic offramp is possible, claiming that it is pulling troops back from the border
• CEO of BP, the largest foreign investor in Russia, says the company will continue with the “business of business” in Russia
• Regardless of cooling, Russian tanks remain just miles from the Ukrainian border, with equipment ready for assaults on Kyiv and Kharkiv

China – Russia Energy Relations 

• No significant developments

U.S. - Canada Energy Relations 

• No significant developments

Middle East Energy Geopolitics

• Egyptian President al-Sisi personally welcomes Israeli Minister of Energy Karin Elharar at EGYPS, prompting warm response from Israeli PM Bennett

Central Asia Energy Geopolitics

• Kyrgyzstan is struggling to fill hydropower dam enough to meet power supply commitments to Kazakhstan

Canadian Oil and Gas

• Most Canadian oil producers continue to prioritize investor returns over boosting output

Electricity

• Aluminum stocks are expected to run out by 2024 due to spiking power prices in Europe and China, and clampdowns on emissions intensity
• New England relied on oil to meet much of its electricity needs in January
• Unlike Winter Storm Uri, cascading failure did not occur in more recent cold snap in Texas

Renewables

• Vestas installs mould for prototype 60% capacity factor offshore wind turbine

Copper

• Glencore’s copper production disappoints due to lower output at several mines
• BHP reveals H1 FY2022 results, showing extremely high EBITDA margins on copper and metallurgical coal production

Lithium

• Major expansion of Europe’s battery manufacturing capabilities expected over next ten years

Nickel

• Russia’s Nornickel, the world’s largest producer of high grade nickel, saw revenues and earnings surge in 2021 from high metals prices

Cobalt

• No significant developments

Carbon

• Rio Tinto to store carbon dioxide in mineral form at nickel mine in Minnesota

Hydrogen

• No significant developments

Nuclear

• Emmanuel Macron announces the construction of six new nuclear reactors, with an option for eight more
• Polish copper miner signs agreement with U.S. SMR company NuScale Power to provide electricity for mining facilities
• Another Japanese nuclear reactor is close to restarting

Biofuels

• New study suggests that the use of land in U.S. by the corn industry makes ethanol more environmentally damaging than gasoline

Quotes

It underlines an important point, something often lost amid woolly discussions about industrial strategy: it's all very well having the smartest folks or the best industrial processes but all too often what matters is proximity. Japan built a battery industry in large part because it was also making the products into which those batteries are inserted. This gravitational pull matters with many products but especially with batteries, which are classed as dangerous, combustible goods subject to many checks and trade barriers.

• From “Humber Refinery Gigafactory: Britain’s best-kept industrial secret is an unexpected solution for saving the planet”, by Ed Conway for Sky News

The United States and our Allies and partners around the world are ready to impose powerful sanctions on [and] export controls, including actions that did not — we did not pursue when Russia invaded Crimea and eastern Ukraine in 2014.  We will put intense pressure on their largest and most significant financial institutions and key industries. These measures are ready to go as soon and if Russia moves.  We’ll impose long-term consequences that will undermine Russia’s ability to compete economically and strategically.

• From “Remarks by President Biden Providing an Update on Russia and Ukraine”

Last year really took everyone by surprise, because falling battery pack costs was going to be the key to driving EV uptake, and that is going to be a challenge, especially as increasingly the higher battery raw materials costs are passed onto downstream users.  

• Alice Yu, from “Battery pack costs on the rise: will it slow down EV adoption?”, podcast for S&P Global Platts