PAST NEWSLETTERS

Main Takeaways for the week of January 26, 2022

Russian invasion of Ukraine is a highly likely, and Europe is not prepared to intervene. While Europe has enough spare LNG import capacity, this capacity is in the wrong places. Markets for coal, LNG, and oil are all on the rise due to combination of stable demand and supply disruptions. Iran continues its reemergence: China and South Korea sidestep American sanctions and the Houthis strike UAE. Massive blackouts in Central Asia. Solar and wind curtailments hit all-time high in California.

Featured Article

French Nuclear Giant’s Fall Risks Energy Security for All of Europe, by Francois de Beaupuy and Machel Morison for Bloomberg.

Headlines

Global Petroleum Liquids

• EIA forecasts U.S. oil production to increase by 6% in 2022 and 5% in 2023, buoyed by high oil prices
• IMF cuts 2022 growth forecast due to combination of omicron, inflation via supply disruptions, food and energy disruptions, and Chinese debt woes
• Peru may rescind Repsol’s contract to operate La Pampilla refinery after Tonga tidal wave oil spill
• OPEC+ states the obvious: crude rally is rooted in geopolitical risks and fuel switching rather than just demand-side improvement

Global LNG

• Commonwealth LNG signs negotiation agreement with Woodside Petroleum for 2 mtpa for 20 years, bringing the 8.4 mtpa terminal closer to reality
• Europe and U.S. searching for gas to replace Ukraine flows, will likely have to bid up price on LNG cargoes currently intended for Asia
• After many LNG cargoes being diverted to Europe, several are now being diverted to Asia amid an uptick in demand
• Japan seeks spot LNG cargoes as Indonesia ban on coal exports and cold weather increases natural gas consumption

Global Coal

• Russia continues to build coal-consuming blast furnaces for its ~70 M tonnes/year of steel production
• Thermal coal prices surge to over USD$300/tonne in response to Indonesia export ban

North American Energy Infrastructure

• TC Energy president of liquids pipelines says “The days of developers proposing multi-jurisdictional mega-projects may be behind us”

U.S. - China Energy Relations

• China thumbs its nose at U.S. JCPOA sanctions on Iran by officially importing four million barrels of Iranian oil

EU – Russia Energy Relations

• Scholz emphasizes the economic damage to Europe for if economic sanctions are placed on Russia
• German government seems to have nixxed financial sanctions on Russian energy sector
• Russia’s Transneft expects to ship more than 900k bpd (out of total capacity of 1.2M to 1.4M bpd) of oil through Druzhba pipeline running partially through Northwestern Ukraine in 2022
• LNG import terminals are concentrated in Western Europe, and particularly the Iberian Peninsula, where there is no large scale natural gas link to France

China – Russia Energy Relations

• No significant developments

U.S. - Canada Energy Relations

• No significant developments

Middle East Energy Geopolitics

• Iranian gas flows to Turkey resume after being cut for 10 days, causing blackouts and shutting down industry in Turkey
• Saudi Arabia and Iraq to link their electricity grids to lessen Iraq’s dependence on Iranian energy imports
• Houthi attack on UAE using cruise missiles, ballistic missiles, and drones is stopped by UAE THAAD defenses
• Seoul pays for Iran’s $18m UN dues from $7B in frozen funds stuck in South Korea

Central Asia Energy Geopolitics

• Massive blackouts hit interconnected grids of Kazakhstan, Uzbekistan, and Kyrgyzstan over due to disconnected power line in Kazakhstan

Canadian Oil and Gas

• No significant developments

Electricity

• California solar and wind power curtailments caused by transmission capacity bottlenecks continue to increase as a share of generation potential

Renewables

• Supply chain issues likely depressed solar power additions in the U.S. South

Copper

• With energy sanctions out of the question, Russian copper and nickel may be targeted
• EU’s largest copper plant states, “There’s no other logical way for the European industries to grow, based on clean energy, than through nuclear power”

Lithium

• Surveyed experts expect lithium carbonate prices to remain sky-high through 2022 in China

Nickel

• Nickel-zinc batteries to be used in a data center in Wyoming

Cobalt

• No significant developments

Hydrogen

• No significant developments

Nuclear

• Talks over EC draft sustainable finance taxonomy stalled over member country opposition to nuclear and natural gas inclusion
• France’s nuclear fleet is showing severe weakness at a very, very bad time

Other Recommended Content

• We are all complicit in climate change – so we should all pay to fix it, by Dieter Helm for Financial Times
• Liquid Hydrogen Wants a Clean Energy Future, by Stephen Stapczynski and David Stringer, for Bloomberg
• Minerals and the clean-energy transition: the basics, by David Roberts
• Want to Derail the Energy Transition? Take Fossil Fuels Out of the Mix, by Gabriel B. Collins and Michelle Michot Foss for Foreign Policy Magazine
• How will Europe cope if Russia cuts off its gas?, article for The Economist