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By David Gaffen, Editor, Energy Markets

Hello Power Up readers! This is a big week in the Middle East, where the leaders of the Organization of the Petroleum Exporting Countries will meet to discuss whether to limit oil output in the near-term, while climate leaders are all gathering in Dubai – this year’s chair of the COP 28 climate summit – to discuss how to limit oil output (among other things) in a much longer time period. The former is weighing on the market’s mind more than the latter right now, with Brent dipping below $80 a barrel.

During the summit, our Sustainable Switch newsletter will be published twice a week with all of the updates from COP28, and you can sign up here!

Meanwhile, here’s the energy rundown.  

Today’s top headlines:

• Brent falls below $80 ahead of OPEC+ meeting
• China’s progress on renewables undermined by coal expansion – research
• What’s the plan for this year’s COP28 climate summit?

The headquarters of the Angolan state oil company, Sonangol, in the capital of Luanda . Angola has been one of the countries agitated about restrictions on OPEC supply. REUTERS/Siphiwe Sibeko

The major OPEC+ producing nations ran into some difficulties last week trying to come to an agreement, forcing them to postpone a key meeting. They’re now closer to a compromise with African oil producers Nigeria and Angola on 2024 output levels, as Alex Lawler, Ahmad Ghaddar and Olesya Astakhova report here. The major African producers want to produce more – or have the option due to disagreements – while the likes of Saudi Arabia are looking to restrict worldwide demand to boost prices.  

The OPEC meeting was scheduled for this weekend – but they were hoping for an agreement given the recent market volatility and its proclivity to continue to edge lower due to weaker worldwide demand and a reasonable rebound in supply from the United States. One of the sources, who spoke on condition of anonymity, said he felt “with 99% of confidence” that OPEC+ could reach an agreement on Nov. 30. 

Currency exchange rates of the U.S. dollar, euro, British pound and Japanese yen against Russian rouble in Moscow — rupees not listed. REUTERS/Maxim Shemetov

Since Western nations imposed sanctions on Russia due to its invasion of Ukraine, Russia has made hay selling a lot of oil to India and China. But the India trade is in peril – because Mumbai is pressing to pay for that oil in rupees. The problem with this? Russia doesn’t import much from India, making it “pointless” to use that currency, and it puts Moscow in the position of having to exchange rupees into a currency that’s easier to convert – like dollars, the base of most world oil trade for decades. 

The problems started when India insisted in July on paying in rupees and the trading activity nearly fell apart, as Elena Fabrichnaya, Nidhi Verma and Dmitry Zhdannikov report here. One Russian banking source close to the Russian central bank said getting revenue in rupees that have little value outside India was “pointless.” Russia has instead been accepting Chinese yuan, the Hong Kong dollar and the UAE dirham. 

That’s the logo of China Petroleum & Chemical Corporation, or Sinopec, at the 2023 energy trade show in Vancouver, British Columbia, Canada. REUTERS/Chris Helgren

Environmental group Greenpeace has accused big oil and gas companies in China and elsewhere of using low-quality carbon offsets to “greenwash” their imports of natural gas while not doing much to reduce emissions, David Stanway reports here.  

Large Chinese firms including PetroChina and CNOOC Gas and Power have signed long-term contracts with Shell for “carbon neutral” liquefied natural gas (LNG), which uses “forest offsets” to balance carbon emissions, but Greenpeace says that branding is misleading the public, and acting as a “smokescreen” to keep boosting overall oil and gas investment. Many groups have criticized carbon emissions schemes, saying they are not easy to measure consistently and often do not provide the benefits advertised.

Things are getting expensive for these panels, Jack. REUTERS/Brian Snyder

About a year ago the United States passed the Inflation Reduction Act, the largest climate change legislation in U.S. history, but the realities of jumpstarting green investment is hitting home for the Biden administration, write Nichola Groom and Jarrett Renshaw.  

The problems? Materials costs have been high, supply chains are still being developed for key goods for energy projects, and permitting as expected has been slow. Orsted had to cancel projects in the U.S. Northeast recently, while the big automakers have backed off ambitious EV plans as consumer choice remains in favor of large trucks and SUVs.

However, some execs say they’re not betting against the IRA, with Vic Abate of GE Vernova saying that “if last year people were thinking ’23 to ’24, it’s probably more ’24 to ’25.”  

“With the IEA forecasting that global oil demand will only grow 0.9 million bpd next year, down from 2.4 million bpd growth in 2023, OPEC+ will have to show significant supply discipline, or at least jawbone such ability, to alleviate market worries of a deep surplus in oil markets next year.” 

Commonwealth Bank analyst Vivek Dhar  

The premier of Alberta, Canada’s main oil-producing province, said she plans to shield provincial power companies from proposed federal clean electricity regulations, as Nivedita Balu reports here.  

Premier Danielle Smith said federal plans to cut greenhouse gas emissions will wreck the energy industry and that she will bring a resolution that would limit the federal government’s ability to press for cuts in emissions.  

The Canadian Supreme Court last month ruled that federal law assessing how major projects such as coal mines and oil sands plants impact the environment is largely unconstitutional. 

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