PAST NEWSLETTERS

Main Takeaways for the week of January 12, 2022

With the West focused on Ukraine, Russia-led CSTO peacekeeping troops deploy to Kazakhstan, either improving or damaging the stability of Kazakhstan’s critical energy supplies, depending on your perspective. China is nervous about situation in Kazakhstan due to its reliance on oil and gas flowing from the troubled country. Libya and Iraq have trouble producing enough oil in January. European energy is in limbo, as Russia continues to threaten war in Ukraine and expectations that 2022 LNG demand will outstrip supply. Indonesia’s coal export ban drags on, causing concern in Japan. Capline pipeline reversal connecting Illinois with the Gulf is completed, allowing more Canadian oil to reach global markets. Several short term energy forecasts are released, with varying levels of confidence in demand because of the never-ending scourge of covid-19.

Featured Article

Looking through higher energy prices? Monetary policy and the green transition speech by Isabel Schnabel for the American Finance Association 2022 Virtual Annual Meeting

Headlines

Global Petroleum Liquids

• EIA releases short-term energy outlook forecasting both consumption and production recovering to 2019 levels in 2022, with Brent prices easing to $68/b in 2023
• Rystad Energy projects major increases in upstream oil investment, particularly in global shale investment

Global LNG

• ICIS forecasts that global LNG demand will increase by 5.5% YoY with supply up 1.7% YoY, indicating a 10.2mt shortfall

Global Coal

• Indonesia coal export ban drags on due to lower-than-expected deliveries to domestic coal power producers
• Japan’s trade minister expected to ask Indonesia to lift coal export ban when he visits the country this week
• 6 GW of coal expected to be retired in the U.S. in 2022

North American Energy Infrastructure

• Capline Pipeline reversal project is fully online, opening up routes for an additional 200k bpd of Canadian oil flowing into Patoka, Illinois to reach the Gulf Coast 

U.S. - China Energy Relations

• No significant developments

EU – Russia Energy Relations

• Talks between Russia and the US over Ukraine make little progress, with Russia unwilling to pull back troops and the US unwilling to promise that Ukraine remains out of NATO
• Russia continues to pull natural gas from Yamal pipeline

China – Russia Energy Relations

• China’s vulnerability to deep Russian military influence in Central Asia emphasized by the fast Russian airlift of CSTO troops into Kazakhstan
• Chinese propaganda outfit Global Times stresses importance of Kazakhstan to BRI and Chinese energy security, and floats Shanghai Cooperation Organization involvement in Kazakhstan
• Russia’s Novatek will supply Chinese firms with 1.6 mtpa of LNG in two long-term deals from its Arctic LNG2 facility

U.S. - Canada Energy Relations

• No significant developments

Middle East Energy Geopolitics

• Libyan oil production recovers somewhat, though continued blockade of Southwestern oil fields by militants keeps oil production 300k bpd below target
• Iraq misses oil production quota for January due to drop in oil production from semi-autonomous Kurdistan

Central Asia Energy Geopolitics

• Chevron-led consortium says that Kazakhstan’s Tengiz oil field output is returning to normal after a sharp drop caused by protests

Canadian Oil and Gas

• CNRL boosts capital expenditures for 2022 from $3.48B to $4.35B, including $700M in strategic growth capital
• Capline pipeline reversal allows record amount of Canadian oil to reach Asia

Electricity

• New York City electricity prices soar to a four-year high on cold weather

Renewables

• Construction begins on world’s largest PV project by nameplate capacity, a 3.3GW plant in China’s Sichuan province, at a cost of US$2.51B

Copper

• No significant developments

Lithium

• Stellantis plans for all vehicles to be electric by 2028

Nickel

• Fresh off a failed bidding war over Ontario nickel reserves, BHP invests $40M in Tanzania’s Kabanga Nickel Ltd. for an 8.9% equity stake in a mine planned for 2025

Cobalt

• No significant updates

Hydrogen

• Hydrogen Europe expects the inclusion of nuclear energy in Sustainable Finance Taxonomy will open doors for hydrogen in the short term
• Thysenkrupp signs supply contract to provide 10 20MW alkaline water electrolysis modules for Shell in Port of Rotterdam for hydrogen production in 2024

Nuclear

• Belgium, which plans to phase out nuclear by 2025, sees the share of nuclear in its power mix rise to 52.4% in 2021 due to disappointing renewables and high gas prices
• Unrest in Kazakhstan, the world’s largest producer of uranium, causes spot prices to jump

Other Recommended Content

• S&P Global Platts overview of Kazakhstan’s importance to commodity markets
• 2022 is When Oil Supply Panic Replaces Fears About Demand by Julian Lee for Bloomberg