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By David Gaffen, Editor, Energy Markets
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Hello Power Up readers! The market continues to have trouble finding any momentum to move higher, with both crude benchmarks caught in the mid-to-low $70s per barrel – despite a series of production cuts from the Organization of the Petroleum Exporting Countries. Those countries, along with CEOs of big firms, spent the last few days in Vienna mostly lamenting their lot in life, as we can detail here.
Today’s top headlines:
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OPEC to Big Oil: It’s the Climate
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UAE’s Jaber warns on emissions
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That’s Sultan Ahmed al-Jaber of the United Arab Emirates – and he’s warning about the fossil fuel industry being left behind.
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The incoming president of the United Nations COP28 climate summit was a controversial pick – Sultan Ahmed al-Jaber of the United Arab Emirates, one of the world’s biggest oil exporters and a member of OPEC. And this year’s COP28 promises to be filled with rancor if only because of who is leading the event this year.
As of this week, Jaber is warning big oil and gas companies that they’ve got to “step up” on reducing emissions, saying they need to get to net-zero emissions by or before 2050 and accelerate the industry’s commitment to reach near-zero methane emissions by 2030.
Jaber was speaking at the OPEC International Seminar in Vienna, a meeting of oil industry CEOs, along with OPEC and its allies. “The phase down of fossil fuels is inevitable. It is in fact essential. But it cannot be irresponsible,” Jaber added.
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Oil Companies: It’s Someone Else’s Problem
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Focus on demand, they say, for the billionth time
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OPEC and big energy companies are facing heat for doubling down on fossil fuels.
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The biggest energy companies say it is up to governments to try to limit demand for oil-and-gas rather than pressure producers to cut supply, a theme those companies have echoed for years, casting themselves as a passive actor in the world’s largest commodities market, as Dmitry Zhdannikov, Ron Bousso and Shadia Nasralla report here. Companies, such as Shell and BP, have slowed plans to reduce fossil fuels output and suggested they will continue to invest in the current energy system.
This stance is not exactly new. At a Columbia University climate event in 2019, U.S. executives from Chevron and Exxon insisted that they were only meeting demand, ignoring the industry’s roles in opposing efficiency efforts and funding research arguing against the consensus surrounding global warming.
“We must invest in the energy system of today as unpopular as it sounds… If we don’t, we will have a mismatch of supply and demand,” BP Chief Executive Bernard Looney said, according to a source present at the conference, as Reuters was denied entry to the OPEC-sponsored event.
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Gdansk port sees record volumes
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The Schwedt refinery in Germany, one of several that had been supplied by Russia but now will get crude from Poland. REUTERS/Annegret Hilse/File Photo
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The biggest oil terminal in Gdansk, Poland is set for another year of record volumes as the nation becomes a bigger locus for oil imports, where it plans to build a new jetty for supertankers now that the region is no longer relying on Russia for oil supplies.
Naftoport handled nearly 18 million metric tons of oil in the first half of 2023 and could surpass 36 million this year, reports Marek Strzelecki here. Refiners that had normally bought Russian crude are looking for supplies elsewhere, so they’re getting more from this connection that imports mostly from Saudi Arabia and the North Sea.
“There is room for additional volume above 36 million tons. We are identifying a new 100% of our capacity with our regular clients, but we are ready to test new levels, though it’s up to our clients and shareholders,” said the port’s CEO Andrzej Brzozka. The port has plans to add a jetty for supertankers to boost overall capacity to more than 45 million tons per year by 2029.
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Nigeria’s Petrol Use Crashes
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With subsidy gone, fuel consumption drops
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Yaouba Ahmadou, in white dress, a semi-wholesaler of Nigeria’s contraband fuel, speaking with his workers in Garoua, Cameroon. Reuters/Desire Danga Essigue
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Average daily petrol consumption in Nigeria fallen by 28% since President Bola Tinubu scrapped a popular but costly subsidy at the end of May, as Elisha Bala-Gbogbo reports here. Nigeria dumped a subsidy that had existed for decades due to its increasing cost.
On average, consumption of petrol is down to 48.4 million liters a day in June, versus 66.9 million prior to that, according to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
The removal of the subsidy has also caused a downturn in the black market in Nigeria’s neighbors Cameroon, Benin, and Togo, which relied on smuggled fuel from Nigeria, the largest economy in Africa. The country may be able to save more than $5 billion this year by getting rid of the subsidy, but it will have a detrimental effect on the economy.
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“Asia is growing. China alone between 2019 and 2023, three million bpd (barrels per day) growth, India one million bpd growth, so there is a pick-up in demand.”
Saudi Aramco CEO Amin Nasser, on the outlook for oil demand in 2024
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Mexico Signs LNG Deal with China
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Super-cooled fuel deliveries to start by 2027
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Mexico Pacific said this week that it has inked a 20-year deal to sell a million metric tons of liquefied natural gas (LNG) annually from its Saguaro Energia export plant to China’s Zhejiang Energy, part of a series of deals between China, a giant importer of natural gas, and producers like Qatar, the United States and Mexico, as Reuters reports here.
The new agreement will allow Mexico Pacific to boost exports to China beginning with shipments in 2027. The company is touting the plant as one of the lowest-cost players and can transit via the Pacific without having to deal with the Panama Canal. China’s ENN Natural Gas recently also signed a 20-year deal with U.S.-based Cheniere Energy while China Gas Holdings signed two deals with Venture Global.
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