Friday, November 20, 2020

Middle East Oil Producers Under Pressure

Arab Gulf oil producers are losing billions of U.S. dollars from oil revenues this year due to the pandemic that crippled oil demand and oil prices. Because of predominantly oil-dependent government incomes, budget deficits across the region are soaring.  

Middle East’s oil exporters rushed to raise taxes and cut spending earlier this year, but these measures were insufficient to contain the damage.

The major oil producers in the Gulf then rushed to raise debt via sovereign and corporate debt issuance. Bond issues in the region have already hit US$100 billion, exceeding the previous record amount of bonds issued in 2019.

Thanks to low-interest rates and high appetite from investors, the petrostates are binging on debt raising to try to fill the widening gaps in their balance sheets that oil prices well below their fiscal break-evens leave.

You can read the rest of the piece via the below link:

Thursday, November 19, 2020

EU: work on the safety of offshore oil and gas operations directive moves on

EU press service reports on the Safety of Offshore Oil and Gas Operations Directive:

There are clear indications that the aims of the Directive on the Safety of Offshore Oil and Gas Operations [2013/30/EC] have been met thanks to its transposition by EU Member States, according to the Commission’s report, published today, on the assessment of the directive. Member States and industry are closely following requirements, it concludes, although with some differences of interpretation. Most of the open issues can be handled under existing work and communication channels with Member States’ authorities and stakeholders, and specifically through the European Union Offshore Authorities Group (EUOAG).

Member States and industry have largely welcomed the introduction of the Directive in its current scope, the report states, while environmental non-governmental organisations (NGOs) are more nuanced in their assessment, calling for further tightening of some measures. All stakeholders point to the depth and intensity of the changes brought about and say that more time and monitoring is required before considering legislative changes. 

You can read the rest of the piece via the below link:

Monday, November 16, 2020

US: Biden administration determined to prevent Nord Stream 2

 US president elect Joe Biden has made clear that he will not allow the completion of the pipeline, announces new sanctions on involved companies in January 2021, write Bloomberg:

The U.S. is drawing up additional sanctions on the Nord Stream 2 natural gas pipeline project, the latest obstacle in the path of the 9.5 billion-euro ($11.2 billion) Russia-to-Germany link that’s been halted almost a year.

House and Senate negotiators agreed to target insurers and technical certification companies working on the project in a defense bill that must pass by the end of the year, according to three people familiar with the matter. The move would add to penalties that stopped work on the natural gas link under the Baltic Sea just a few weeks before it was to be completed.

The rules could inflame tensions between the U.S. and Chancellor Angela Merkel over the project, which would bring gas into northern Germany and help Russia’s state-backed exporter Gazprom PJSC tighten its grip on energy supplies to the region. President Donald Trump, backed by both Republicans and Democrats in Congress, have criticized Europe’s reliance on Russia and offered U.S. cargoes of liquefied natural gas as an alternative.

You can read the rest of the piece via the below link:


Sunday, November 15, 2020

Lomborg : german politicians are fooling themselves about the efficacy of renewables

 Another scathing account of Dane Björn Lomborg with Germany's energy policy. In an article for germany newspaper WELT he works out that Germany's measures to reduce CO2 are mostly ill-considered, useless, expensive and moreover strain emerging economies:

In a rational world, climate policy would be about finding the most cost-effective policy for the very real problem of global warming. But in the real world, many climate policy measures seem to be more about making us feel morally superior than using scarce resources effectively to have a noticeable impact.

Every spring, the lighting at the Brandenburg Gate, as well as on millions of buildings around the world - including the Eiffel Tower, the Sydney Opera House and the Empire State Building - is switched off for an hour under the campaign name "Earth Hour". The idea behind it is to jointly set an example for climate protection. But if you get people to turn off the lights for an hour, it doesn't have a noticeable effect on the climate. And if people light a few candles instead, that actually increases the net emissions.

Thursday, November 12, 2020

Mediterranean: when exploration of gas fields hurtles with hegemonic ambitions

 The projected EastMed pipeline which is scheduled for construction start in 2023 is jeopardised by expansionist aspirations of Turkey. Israel has ordered four stealth capable corvettes at a german shipyard. The first one has just been delivered. Some observers draw parallels to arm races in the wake of WW1 writes german newspaper WELT:

Israel's security is German reasons of state - Angela Merkel's confession to the Knesset is probably the most frequently quoted sentence by a German head of government in Israel. Now Germany's responsibility for the Jewish state is to become visible: On November 11, the Kiel-built warship “INS Magen” (Hebrew for protective shield) will be handed over to the Israeli Navy.

It is the first of four Sa’ar 6-class corvettes that the Israeli government has ordered from ThyssenKrupp. According to the Ministry of Defense, the federal government is financing around a third of the project with 115 million euros.

Nuclear phase-out: Germany's constitutional court reprimands Parliament for poor compensation regulation

   The hasty decision of nuclear phase-out after the Fukushima nuclear incident reguires a financial compensation for the plant operators. However the bills passed so far are so poorly drafted that they could not become effective. The german constitutional court (Bundesverfassungsgericht) severely blamed lawmakers for their faulty work, writes german newspaper WELT:

The financial compensation for certain power plant operators due to the accelerated nuclear phase-out after the reactor disaster in Fukushima has to be completely reorganized again. The 2018 amendment to the law was inadequate and also never came into force due to formal deficiencies, the Federal Constitutional Court decided after a lawsuit by the energy company Vattenfall. The legislature is “still obliged to implement new regulations as soon as possible”, as the highest German court in Karlsruhe announced on Thursday. (Az. 1 BvR 1550/19)

Because of the reactor accident in Fukushima, Japan, the federal government withdrew an extension of the service life of the 17 German nuclear power plants that had been decided just a few months earlier. By the end of 2022 at the latest, all reactors must be taken off the grid on fixed dates. Then the end of nuclear power.

In 2016, following lawsuits from Eon, RWE and Vattenfall, the Federal Constitutional Court ruled that the amendment to the law that sealed this turnaround was essentially compatible with the Basic Law. The energy companies are entitled to adequate compensation for investments that have become pointless and forfeited production rights.

Vattenfall, among others, benefits from this. Due to the fixed shutdown dates set in 2011, the Swedish group no longer had the opportunity to internally produce electricity volumes originally allocated to its two German power plants, Krümmel and Brunsbüttel. For this, the group should be able to demand a compensation payment in the millions in 2023. According to the Federal Environment Ministry, the exact amount will only then be able to be determined.

However, the legal regulations for this are in parts "unreasonable", as stated in the Karlsruhe decision. In addition, the entry into force was made dependent on the approval of the EU Commission. However, this was never formally issued.

Because of the nuclear phase-out, Vattenfall is also pending a lawsuit at the World Bank's International Court of Arbitration (ICSID) in Washington. This involves claims of several billion euros due to the permanent shutdown of Krümmel and Brunsbüttel.

Saturday, November 7, 2020

Germany: Uniper stops construction of FSRU Wilhelmshaven

Concerns about a sufficient workload of the planned FSRU confirmed by the paucity of prospective clients willing to book capacities le to the decision to put the project on hold, meanwhile the building works to complete the Nord Stream 2 pipeline have been resumed, writes german newspaper WELT:

Politicians are often sales geniuses, and this is particularly true of the incumbent US President: Donald Trump once advertised American natural gas on the world market as "Freedom Gas". The fuel extracted with the controversial "fracking" method should help to free the countries of the world from the dependence on Russian oil and gas monopolists.

The oil and gas business has always been highly politicized and is still at the center of geostrategic planning by the great powers. It was probably not due to purely economic considerations that Germany started building three liquefied gas ports on the North Sea coast a few years ago.

Frozen liquid gas, also known as LNG, delivered by tanker was intended to limit the market power of the main European supplier, Russia, in natural gas. The EU Commission also considered this to be sensible.

Danish author: The myths of renewable energies

 Danish author Björn Lomborg of think tank Copenhagen Consensus Center considers renewable energies an eyewash. Neither are they low in price nor do they contribute to halt the climate change. He develops some interesting arguments in german newspaper WELT:

Are Renewable Energies Competitive? We hear constantly that wind and solar energy are conquering the world. They are free and - we are told - cheaper than fossil fuels. But why is Germany spending 18 billion euros this year on subsidizing solar and wind energy? In the current discussion about renewable energy, a little is actually true and a lot is misleading.

Technically speaking, it's true that an extra kilowatt-hour of electricity generated by the cheapest and most effective new wind and solar systems is cheaper than fossil fuels. In Germany, according to the Fraunhofer Institute, these best-case technologies generate an average of one kilowatt hour of electricity for 5.2 cents for solar and 6.1 cents for wind energy. Compared to the average price of a new lignite power station that produces a kilowatt hour for 6.3 cents, it seems absolutely logical to build more and more wind and solar systems.