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By David Gaffen, Editor, Energy Markets

Hello Power Up readers! The energy world is still grappling with whether global economies are slowing a lot or just a little. Prices keep meandering about. OPEC sees China’s demand bumping up just a bit more than it did a month ago, but that does not necessarily translate to a notable rebound in prices. Here’s what’s happening.  

Today’s top headlines:

• Biden administration proposes crackdown on power plant carbon emissions
• Saudi Aramco sees slowed progress on planned IPO of trading unit
• Japan’s Eneos aims to double profit in three years with green energy plan

That’s Saudi Foreign Minister Prince Faisal bin Farhan Al Saud and Chinese Foreign Minister Qin Gang in Beijing. OPEC sees China’s demand picking up a bit this year. Saudi Press Agency/Handout 

China’s rebound in the first quarter delighted economic forecasters who felt that the country was moving past the sluggish growth due to restrictive COVID measures – but that demand has come back in fits and starts. OPEC on Thursday said it raised its forecast for Chinese oil demand growth in 2023, saying it will rise by about 800,000 barrels per day in its most recent report, as Reuters reports here.  

Overall oil demand worldwide is expected to rise by about 2.33 million bpd, or roughly 2.3%. That’s about the same as its previous forecast, and it also said its output was down by 191,000 bpd to 28.6 million bpd. OPEC had been cutting back in response to weak oil prices that have not truly abated despite OPEC’s efforts to restrain supply. The group may elect to cut more in the future, but keeping oil prices lower as China’s demand rebounds could help boost overall economic growth worldwide. Economists believe that oil prices could remain under pressure due to expectations for slowed economic growth in the U.S. and elsewhere.  

Fires in Alberta, Canada. Alberta Wildfire/Handout 

In the last few weeks wildfires have spread throughout Alberta, the province in Canada that produces most of the country’s oil, causing production to shut in. By this week some of that output was restarting, though conditions could still deteriorate, as Nia Williams reports here.  

About 319,000 barrels of oil equivalent per day (boepd), or 3.7% of the country’s production, was shut earlier this week with more than 100 fires raging. Several companies, including Crescent Point Energy and Tourmaline Oil, along with pipeline company TransCanada, have restarted facilities that had been shut. Right now, about 18,000 people are under evacuation orders.

Lots of projects!

Numerous big projects to boost wind development are in the works in Taiwan, which currently imports roughly 98% of its energy and wants to shift away from that to rely more on wind to power generation of electricity. Taiwan is one of the biggest offshore wind markets outside of Europe, but the cost of producing turbines – and Taiwan’s limited space along its coast – means it may not be able to develop as much as it wants, as Sarah Wu reports here.  

Taiwan is amending its laws to allow more construction further away from its territory. One other complicating factor – many are concerned that China will assert control over Taiwan and attempt to take it by force, which increases the risk to investment in the small island. Current wind farms are being used by the likes of Taiwan Semiconductor, the world’s largest contract chipmaker – and which accounted for 6.4% of Taiwan’s electricity consumption in 2021

These guys. REUTERS/Leah Millis

The Biden administration was able to get legislation passed into law last year to boost investment in renewables and various other types of domestic development, but it did not get the permitting reform it wanted that would speed up approval of energy projects. But such a bill may happen as a way of brokering compromise between the Democratic and Republican parties to head off the impasse over the U.S. debt ceiling, as Jarrett Renshaw and Tim Gardner report.  

The push on permitting is a way for the White House to try to meet the Republicans demands that have existed for some time as the U.S. tries to avoid a catastrophic default on its debt. Permitting has also been a high priority for coal-producer West Virginia’s Democratic Senator Joe Manchin, a longtime advocate for fossil fuel development. The bill would put a two-year limit on environmental review of major energy projects and pushes the president to name at least 25 projects as high priority. 

“Rotterdam would be our hub to Europe.”

Saudi Energy Minister Prince Abdulaziz bin Salman, after the kingdom said it would collaborate with the Netherlands on development of green energy and hydrogen. 

China has ratcheted up its use of its own currency to buy oil, coal and some other materials from Russia in the last year as the world’s biggest importer of oil shifts away from the dollar-denominated trade in energy, as Chen Aizhu reports here. The yuan is now the most widely used currency for cross-border transactions in China, a far cry from years ago when it was a barely used currency.  

Still, analysts say this move will likely be limited to the energy and commodity sectors – even as it becomes more significant in world trade in coming decades. The dollar and euro are the world’s primary reserve currencies. Since the U.S. imposed sanctions against Russia following Moscow’s invasion of Ukraine, Russia has shifted to trading with other countries in other payment systems. Russia, meantime, has been accepting more payments in both roubles and yuan and has transacted with India in rupees as well.  

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