PAST NEWSLETTERS

Main Takeaways for the week of January 19, 2022

Russia could invade Ukraine at any moment. Europe is noncommittal about financial and energy sanctions on Russia. Energy crisis in Europe continues to unfold, as more European countries introduce new energy subsidies to protect households from the shock. Oil continues a sharp trend upward, with OPEC+ happy with current prices. Indonesia loosens coal export ban. U.S. Congress sets deadline for end of military use of Chinese rare earth metals. Evidence continues to accumulate of tight lithium market in 2022 and tight copper market into late 2020s.

Featured Article

An Article by the Defence Secretary on the Situation in Ukraine by Ben Wallace, Secretary of State for Defence of the United Kingdom.

Headlines

Global Petroleum Liquids

• OPEC+ is 650k bpd below their target - 14 countries, including Saudi Arabia and Russia, are short of their quotas
• With WTI and Brent in the USD$85 zone, Saudi Arabia’s energy minister says that they are comfortable with current oil prices
• Libyan oil production facing continued uncertainty, as unpaid oil workers consider shutting down oil fields
• Goldman Sachs and some OPEC officials see $100 oil in the near future

Global LNG

• Australian heatwave briefly shuts down a production train at Woodside Petroleum’s North West Shelf, demonstrating risk of heatwaves to LNG

Global Coal

• Indonesia loosens coal export ban, allowing ships to depart with coal from companies that have fulfilled their domestic supply obligation
• Coal met more than half of a massive increase in 2021 global electricity demand

North American Energy Infrastructure

• No significant developments

U.S. - China Energy Relations

• Bipartisan bill introduced to set timeline for U.S. defense contractors to phase out use of Chinese rare earths

EU – Russia Energy Relations

• Milder winter in Germany has resulted in lower gas storage withdrawals, easing some alarm
• Russia prepares for an imminent invasion of Ukraine, which will certainly involve cutting off gas transit through the country
• Grim prospects as Europe and U.S. fail to agree on financial sanctions on Russia in the case of invasion of Ukraine due to Europe’s gas shortages
• IEA head Fatih Birol again blames Russia for Europe gas crisis
• Germany will “discuss” penalizing Nord Stream 2 pipeline if Russia attacks Ukraine

China – Russia Energy Relations

• No significant developments

U.S. - Canada Energy Relations

• No significant developments

Middle East Energy Geopolitics

• Yemeni Houthis attack UAE with drones, further complicating the JCPOA talks
• Secret agreement may have been brokered by Amos Hochstein for Israel to supply struggling Lebanon with natural gas via Jordan and Syria
• Algeria-Morocco spat disrupts LPG flows

Central Asia Energy Geopolitics

• CSTO force exits Kazakhstan, leaving Russia in a strengthened position in Central Asia and proving the capabilities of the Russian-centered alliance

Canadian Oil and Gas

• BMO Capital Markets CEO Dan Barclay says that continued support for traditional energy is needed – “We believe in energy and we believe in the Canadian energy story in particular, and we believe in a smart transition.”
• IEA commends Canada’s climate policies, but says there is “more work to be done” on reducing emissions from oil and gas sector beyond 2030
• ExxonMobil joins Net Zero 2050 club

Electricity

• Shell expects electricity to provide 60% of China’s energy under a net-zero 2060 scenario
• Cyberattacks on Ukraine’s grid infrastructure expected in the opening hours of a Russian invasion
• Government of France forces Electricite de France to continue selling power at a huge discount, protecting households but bringing the utility to its knees
• Sweden joins countries providing electricity subsidies to households

Renewables

• Wood Mackenzie sees increased competition in renewables posing challenges for firms
• Chinese solar wafer manufacturer unexpectedly increases prices by 2.4-5.1%

Copper

• Rystad forecasts huge copper supply deficit by 2030, with demand outstripping supply by six million tonnes due to lack on investment and rising demand

Lithium

• Australian Lithium miner Allkem predicts major jump in lithium prices after June due to demand from new Chinese battery factories
• Wood Mackenzie sees 50% market share penetration of EVs by 2050 under current policies

Nickel

• No significant developments

Cobalt

• No significant developments

Biofuels

• Constraints on feedstocks mean that less than half of the renewable diesel projected by the U.S. government is likely to be produced in 2025

Hydrogen

• IRENA releases rosy report on future potential for hydrogen to displace other fuels and reduce power of energy producers
• Germany will not provide subsidies for blue hydrogen

Nuclear

• Several Electricite de France nuclear reactors require unexpected maintenance, putting even more pressure on the European grid

Other Recommended Content

• Safeguarding Critical Minerals for the Energy Transition, by Nikos Tsafos for the Center for Strategic and International Studies
• Geopolitics of the Energy Transformation: The Hydrogen Factor, by the International Renewable Energy Agency
• How the U.S. fell behind in lithium, the ‘white gold’ of electric vehicles, by Jeniece Pettitt for CNBC
• Russia’s Possible Invasion of Ukraine, by Seth G. Jones for the Center for Strategic and International Studies
• Expensive energy is baked into Britain’s future, for The Economist
• Canada 2022 Energy Policy Review, by The International Energy Agency