View in Browser

Sign up for Reuters newsletters

By David Gaffen, Editor, Energy Markets

Hello Power Up readers! It’s a busy time, though the meandering price of oil and natural gas might not suggest it. Russia is facing more sanctions from the G7, companies are questioning the Biden emissions plan for power plants, and Argentina is looking to reverse a pipeline. Power Up will not be published this coming Thursday, so we will be back in one week.  

Today’s top headlines:

• Fossil fuel-centered growth is obselete – EU’s von der Leyen
• TC Energy finishes recovering oil from Kansas creek in Keystone spill
• COLUMN: Global petroleum stocks normalize after massive SPR drawdown

A Ukrainian serviceman rests before a fight, as Russia’s attack on Ukraine continues, near the front line city of Bakhmut, in Donetsk region, Ukraine. Radio Free Europe/Radio Liberty/Serhii Nuzhnenko via REUTERS

More sanctions against Russia are coming from the Group of Seven (G7) nations, as Trevor Hunnicut and Andreas Rinke report here. The G7 has spearheaded a series of sanctions since Russia invaded Ukraine last year. With Ukraine planning a counteroffensive to try to drive Russia out of Bakhmut, key territory Moscow captured, the G7 is moving on more sanctions to try to undermine Russia’s future energy production as well as curb trade that supports its military. 

Russia’s oil output declined in 2022 since the sanctions– which include a cap on the selling price of Moscow’s oil – started, but its overall output has remained reasonably high, and is expected to come to around 10.4 million barrels per day in 2023, excluding gas condensate. More recently, output is down as Russia cut production in line with cuts from OPEC as well, but the country has also reduced the information flow around its energy data since it invaded Ukraine last year.  

Russia has also lost thousands of troops since the invasion. Last year, oil prices soared, nearing $140 a barrel, but have steadily ebbed and are now trading in the mid-$70s, while natural gas prices in Europe finally started to come down after the region got through a mild winter and continues to stockpile energy for the next winter.  

That’s Iraq’s oil minister Hayan Abdel-Ghani during a press conference. REUTERS/Essam Al-Sudani

The Organization of the Petroleum Exporting Countries and their allies known as OPEC+ cut production at their most recent meeting, surprising the markets, but oil prices have continued to drift lower due to weakened demand and China’s slow recovery after removing its most restrictive COVID rules. However, officials from Iraq say the group may not cut output more to try to lift prices once again just yet, as Aref Mohammed reports here. 

In his first interview since taking office, Iraqi Oil Minister Hayan Abdel-Ghani said that “there will be no additional reduction, and as for Iraq, we cannot reduce further.” OPEC+ cut production in late 2022 as the demand outlook weakened, and then surprised markets with another cut of 1.2 million bpd in early April. The next meeting is scheduled for June 4. Abdel-Ghani said in an interview that the second cut did help with market stability – and others have said it rooted out short-sellers who were trying to push prices lower.  

That’s a cooling tower at a Duke Energy coal-fired power plant in Crystal River, Florida. REUTERS/Dane Rhys

Last week the Biden administration announced a new proposal that would try to drastically reduce carbon emissions out of the power industry – and in some cases with the hoped benefit of many installing carbon capture (CCS) equipment that can take CO2 from plants, or to use hydrogen as a fuel as well. But there’s going to be plenty of legal pushback, raising the chances that this idea ends up like a clean power plan proposed by the Obama administration that never came to pass.  

Representatives of the power industry say that the technology involved – carbon capture as well as the production of hydrogen – are not economically viable and not technically feasible, and therefore the EPA cannot compel companies to use them. The administration of course disagrees – pointing to the U.S. Inflation Reduction Act’s incentives as reasons to push harder on new technologies, as Valerie Volcovici and Tim Gardner report here. 

Right now, there are only about a dozen active CCS projects in the U.S., which can store around half a percent of national emissions, according to the Global CCS Institute. But proponents of the idea say that previous such efforts concentrated on pressing for technological advances that became more widespread, and that this could happen here as well.  

Argentina has been developing its Vaca Muerta region for years, in fits and starts.

Argentina is looking for bids to try to reverse the flow of natural gas in a key pipeline so it can start getting to the point where it can handle its own supply and eventually export some of that gas, as Eliana Raszewski reports here.

The country has long wanted to reduce its dependency on imported gas, and that came with getting Vaca Muerta going, the second largest shale gas reserves in the world. The country faces myriad problems including triple-digit inflation that has sapped incomes, and a weak currency, and has an energy deficit of about $5 billion annually. 

A stretch of the pipeline that connects Vaca Muerta to Buenos Aires should become operational in about 40 days, along with some other connections to other parts of the country. Argentina eventually hopes to export gas to neighbors Bolivia and possibly Chile.

The line, known as the Northern Gas Pipeline, is expected to be completed by next year – and help replace current imports from Bolivia. As of March, Vaca Muerta produces about 52.3 million cubic meters per day, accounting for about 40% of the country’s gas production.  

“Bills go up and we still don’t have good services.”  

Maria Rodriguez, 36, from Valencia, Venezuela, where utility bills are rising as subsidies run out. 

German energy firms Sefe and Uniper awarded some traders millions of dollars in bonuses for 2022, as Dmitry Zhdannikov, Marwa Rashad and Christoph Steitz report here citing four sources, even though the companies had just gotten multi-billion-dollar bailouts.  

The story is that the companies see bonuses like this as on par with remaining competitive, but that’s not going to thrill people who see that Germany had to give them around 26 billion euros ($28.6 billion) in equity injections and loans after they ended up with record losses after buying natural gas at sky-high prices to replace supply lost from Russia.

Moscow largely cut off supply in the months after its invasion of Ukraine. Sefe, the former German division of Russia’s Gazprom, said the bonuses were justified by the fact that those traders contributed to the security of the country’s supply in the wake of the invasion. 

Sponsors are not involved in the creation of newsletters or other Reuters news content.

Power Up is sent twice weekly. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here.

Want to stop receiving this newsletter? Unsubscribe here.

To manage which newsletters you’re signed up for, click here.

Reuters Terms & Conditions and Privacy Statement