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By John Kemp

Welcome to Power Up. Australia’s LNG dispute has been settled after strong pressure to compromise by the government’s Fair Work Commission, lifting the threat that had boosted global gas prices in recent weeks. But in the rest of the world, the story is still one of shortages – lack of rains and hydro power in Asia; lack of spare refinery capacity and mechanical problems in the United States; and fuel shortages prompting an export ban in Russia.

Today’s top headlines:

• U.K. delay in fossil fuel car ban clouds investment outlook

• Hydro-rich Tajikistan has big ambitions for hydrogen production

• Berlin takes closer look at sale of MAN gas turbine division to China

Chevron-operated Gorgon project on Barrow Island, Australia. Chevron/Handout via REUTERS

Australia’s Offshore Alliance called off strikes at Chevron’s two major liquefied natural gas (LNG) projects after unions and the company accepted a compromise put forward by the Fair Work Commission. The proposals will be turned into a final agreement in the coming weeks, and include substantial improvements in pay, job security, rosters and career progression, union negotiators said.

No LNG shipments were disrupted by the industrial action. But the disputes, part of a wave of industrial unrest, had roiled global gas markets over the last six weeks and sent prices sharply higher. The settlement could buy industrial peace in the offshore sector for up to four years, analysts say.

China’s Baihetan hydropower plant. REUTERS/File Photo

Hydropower generation in Asia has plunged at the fastest rate in decades amid sharp declines in China and India, forcing power regulators battling volatile electricity demand and erratic weather to rely more on fossil fuels.

Despite big increases in generation from wind and solar farms, Asia’s two biggest economies were forced to increase coal-fired generation to make up for the shortage of hydro during this summer’s heatwaves. Asia’s hydropower output fell 17.9% during the seven months through July, while fossil fuel-fired power rose 4.5%.

Phillips 66 refinery, as seen from Rodeo, California, the oldest oil refining town in the American West. REUTERS/Nathan Frandino

U.S. oil refiners cranked up processing this year amid soaring demand for gasoline and diesel but are now being hit by increasing outages hampering their efforts to rebuild thin fuel stockpiles.

Mechanical failures have jumped by more than 50% so far in 2023, which has combined with planned maintenance after a long run of operating near full capacity to tighten fuel supplies and boost prices.

Fuel station of Neftmagistral company in Moscow, Russia. REUTERS/Maxim Shemetov

Russia’s wholesale gasoline and diesel prices have fallen following the introduction of a ban on exports. Military mobilisation and strong export demand have left parts of the country experiencing fuel shortages exacerbated by panic-buying and hoarding.

Global fuel stocks are low and refiners have been exporting to capture higher prices internationally. Before the export ban, Russia’s wholesale fuel prices had reached all-time highs.

A Kremlin spokesman told reporters the export ban would last for as long as necessary to ensure market stability.

“As we build an energy system free of all unabated fossil fuels, including coal, we must rapidly and comprehensively decarbonize the energies we use today.”

Incoming COP28 President Sultan Al Jaber of the United Arab Emirates said at a climate summit held alongside the UN General Assembly this month.

The complete phasing-out of fossil fuels is not realistic, China’s top climate official told ambassadors at a meeting in Beijing on Sept. 18, adding that climate-warming fuels must continue to play a vital role in maintaining global energy security.

China has rejected U.S. attempts to treat climate change as a diplomatic “oasis” that can be separated from the broader geopolitical tensions between the two sides, with U.S. sanctions on Chinese solar panels still a sore point.

China also reiterated its strong opposition to the EU Carbon Border Adjustment Mechanism, which will impose carbon tariffs on imports from China and elsewhere.

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