PAST NEWSLETTERS

Main Takeaways for the week of February 2, 2022

Europe considers options to diversify its sources of natural gas in the case of Russian supply disruption. China stresses the importance of balancing climate with energy security by planning continued expansion of enormous coal power fleet to 2030 while also overseeing major additions to offshore wind. Concerns about supply security for coking coal, copper, and nickel multiply. First liquefied hydrogen cargo in history sails from Australia to Japan, but questions about economics of intercontinental hydrogen transport remain.

Featured Article

Ukraine Could Result in Two Gas Supply Scenarios in Europe: Bad and Worse, by Javier Blas for Bloomberg

Headlines

Global Petroleum Liquids

• South Korea has replaced much of its reliance on Middle Eastern crude with oil from North and South America
• Exxon and Chevron continue strategy of focusing on shareholder returns rather than increasing production despite high prices

Global LNG

• IEA expects 4% growth in global LNG trade in 2022, mainly driven by Asia energy needs and restocking Europe’s inventories
• Panama Canal bottleneck restricting Gulf Coast LNG exports to Asia
• Qatar affirms commitment to support Europe in case of Russian gas disruption, but warns that diverting LNG cargoes will have global effects

Global Coal

• China coal-fired power generation capacity expected to peak at 1,260 GW in 2030
• Sky-high coking coal prices the result of structural decline in coal mining investment, according to McKinsey

North American Energy Infrastructure

• Sabine Pass train 6 and Calcasieu Pass forecast to be main contributors to 16% growth in U.S. LNG exports forecast by IEA in 2022
• TransAlta seeks to build a battery energy storage facility near Ghost Reservoir
• Coming cold snap will bring Texas power demand close to levels last seen in 2021’s winter storm Uri

U.S. - China Energy Relations

• Xi Jinping stresses importance of balancing climate ambitions with ensuring energy security and sustained economic growth

EU – Russia Energy Relations

• Britain, Ukraine, and Poland begin talks for a “trilateral document on cooperation to strengthen regional security”
• S&P Global Platts does not anticipate Russian ban from SWIFT, and foresees limited impact from banning energy trade in USD
• Forward contracts shows that the market expects Europe to be short of natural gas into 2023 and 2024
• After initially booking export capacity in Yamal-Europe pipeline, Gazprom halts westbound natural gas flows again
• Russia bans exports of Ammonium Nitrate to Europe for two months, reminding us that Russia provides half of EU ammonia imports

China – Russia Energy Relations

• No significant developments

U.S. - Canada Energy Relations

• Federal judge annuls offshore lease sale in Gulf of Mexico, citing lack of consideration of foreign consumption of the oil in environmental assessment
• Sanctions on Russian energy could benefit Canadian oil producers, with Canadian heavy oil substituting for Russian heavy oil

Middle East Energy Geopolitics

• Troubled Lebanon signs agreement for Jordan to supply electricity generated from Egyptian NG via Syria, as Lebanon's state electricity company edges toward collapse

Central Asia Energy Geopolitics

• No significant developments

Canadian Oil and Gas

• Oil sands producers are outperforming shale and conventional oil peers due to very low marginal costs of production and Line 3 opening

Electricity

• China releases guidance on the formation of a National Uniform Power Market, integrating regional grids and connecting renewables with demand
• Department of Homeland Security warns that domestic extremists have developed plans to attack U.S. electricity infrastructure

Renewables

• China added 16.9 GW of offshore wind in 2021

Copper

• Drought is expected to severely reduce Anglo American copper production in Chile throughout 2022

Lithium

• NREL projects almost a terawatt of chemical batteries needed to meet zero carbon 2050 goals in the United States

Nickel

• Canadian deep sea mining start-up The Metals Company acquires first vessel, expects to start production of nickel, cobalt, copper, and manganese in the Pacific Ocean in 2024
• Indonesia restricting raw material exports across the board to encourage domestic downstream industry, including nickel

Cobalt

• No significant developments

Hydrogen

• First Chinese green hydrogen produced from 20 MW Shell electrolyzer in Hebei
• First liquid hydrogen cargo sails from Australia to Japan, but high energy cost of liquefaction and low volume energy density clouds viability

Nuclear

• No significant developments

Other Recommended Content

• Storage Futures Study: Grid Operational Impacts of Widespread Storage Deployment, for the National Renewable Energy Laboratory
• Gas Market Report, Q1 2022 for the International Energy Agency
• Standing Committee on Industry and Technology Meeting no. 3, featuring Nikos Tsafos, CSIS James R. Schlesinger Chair in Energy and Geopolitics
• Gas Will Stay High Even After the Spat With Russia, by Javier Blas for Bloomberg
• Europe needs a strategy for seasonal energy balancing, by Nikos Tsafos for Euractiv
• To deter Russia, threaten its role in the green economy, by Nikos Tsafos for Euractiv
• Indonesia’s Nickel Industrial Strategy, by Isabelle Huber for CSIS
• As Europe seeks alternatives to Russian gas, Algeria has pipeline capacity to spare, by Herman Wang for S&P Global Platts
• Union-Wide Security of Supply Simulation Report, by the European Network of Transmission System Operators for Gas