PAST NEWSLETTERS

Main Takeaways for the week of February 23, 2022

Russia moves into Eastern Ukraine, moving the pieces into position for a wider invasion. Sanctions on investment in the occupied regions and on Nord Stream 2 are unlikely to change Russia's calculations. China provides limited support for Russia, but even that may be a mistake as the world organizes itself into four poles, with China aligning itself with the Russia against the EU and U.S. Shell sees increasing tightness in global LNG markets. Indonesia will be keeping more of its domestically produced coal. Japan’s Nippon Steel asks for massive subsidies for decarbonization, as JERA seeks 500 mtpa of ammonia. Nickel hits a decade high on concerns over Russian supply.

Featured Article

Supply Chain Resilience Key to the Future of a Global and Local Automobile Market, by Sarah Goldfeder for the Canadian Global Affairs Institute

Headlines

Global Petroleum Liquids

• EIA expects U.S. to be a net crude oil and liquids importer in 2022, as imports of crude outweigh exports of refined products
• Promising signs for return of JCPOA deal as a prisoner swap between Iran and the U.S. is expected soon
• Japan will release oil from SPR from April to July in an attempt to lower prices
• S. stops short of harsh sanctions on Russia, delaying any hit to Russian oil supply

Global LNG 

• Massive 7.8 mtpa Train 6 of Qatar’s Laffan Liquefaction plant goes down for unplanned maintenance
• Pakistan left in a lurch, buying spot LNG cargoes as two contracted deliveries unexpectedly fall through
• Shell 2022 LNG outlook predicts LNG demand outstripping operating and under construction supply by mid 2020s, becoming worse in 2030s

Global Coal

• Indonesia will be keeping more domestically produced coal in country in order to avoid a repetition of December’s shortage
• Nippon Steel is asking for $17.3 billion in government subsidies to decarbonize its steel production while staying competitive with China

North American Energy Infrastructure

• S. federal Judge blocks Biden administration from using the Social Cost of Carbon in Federal regulations
• S. supreme court rejects Dakota Access Pipeline bid to avoid an environmental review for under-lake pipeline, opening up possibility of shutdown
• White House warns that Russia may target U.S. critical infrastructure

U.S. - China Energy Relations

• No significant developments

EU – Russia Energy Relations

• Russia recognizes independence of Donbass rebel groups, as well as their claims over the Donetsk and Luhansk oblasts, setting up full invasion of Eastern Ukraine
• Germany halts the certification process for Nord Stream 2

China – Russia Energy Relations

• China avoids endorsing Russian invasion of Ukraine, but also avoids condemning Russia’s actions

U.S. - Canada Energy Relations

• No significant developments

Middle East Energy Geopolitics

• No significant developments

Central Asia Energy Geopolitics

• Kazakhstan arrests former defence minister as President Tokayev strengthens grasp on power

Canadian Oil and Gas

• Blackrock’s head of external affairs writes that “We have not and will not boycott energy companies.”

Electricity

• High electricity prices are making residential solar attractive

Renewables

• Carbon credit markets may be turning away from renewables

Copper

• No significant developments

Lithium

• Lithium deposits in California’s Salton Sea could be larger than any salar in South America

Nickel

• Nickel hits decade high due to low inventories and potential sanctions on Russia, one of the most significant suppliers of nickel

Cobalt

• No significant developments

Carbon/Graphite

• Singapore announces major increase to carbon tax

Hydrogen

• JERA is planning to buy up to 500k tonnes/yr of fuel ammonia for fuel switching at coal and gas fired power plants
• Biden Admin announces new hydrogen policies

Nuclear

• France’s EDF to sell shares in order to keep afloat amid unplanned reactor shutdowns and soaring costs

Biofuels

• No significant developments

Quotes

Although war in Ukraine would not pose an immediate military threat to Estonia or NATO, Russia’s political and military pressure on the Baltic states could increase in the long term should Russia achieve diplomatic and/or military success on the Ukraine issue. Even if Russia’s leadership can be persuaded to desist from military aggression, Estonia and other Western countries must prepare for increasingly sustained military pressure from Russia – direct threats of war have become an integral part of the foreign policy of Putin’s Russia over the past year.

• From Russia is Ready for War, Estonian Ministry of Defence

If Moscow can demonstrate that Western security guarantees mean little, then it can contrast Western abandonment of Hosni Mubarak in Egypt, Ashraf Ghani in Afghanistan, and Ukraine, with Russia’s determined support of Bashar Al-Assad. Though this pitch may be unpalatable to publics it is more appealing to governments.

• From The Plot to Destroy Ukraine, by Jack Watling and Nick Reynolds for the Royal United Services Institute for Defence and Security Studies

Chinese strategists view Russia, the United States, and Europe as the most important determinants of the global balance of power. They have long seen Europe’s dreams of a multipolar world as aligned with their own. By cementing the split between Russia and Europe, a Russian invasion of Ukraine would thus risk dividing the most important powers into two blocs—Russia and China on one side and the United States and Europe on the other—re-creating the Cold War security arrangements that China claims to vehemently oppose. Making matters worse, China would be aligned with the weakest of the three other powers.

• From China’s Ukraine Crisis, by Jude Blanchette and Bonny Lin for Foreign Affairs