Category: Nieuws

Abu Dhabi National Oil Company (ADNOC) will buy 30% in the Absheron gas field in the Caspian Sea in Azerbaijan by acquiring stakes from the current partners in the field, TotalEnergies and SOCAR.

The French supermajor and State Oil Company of the Republic of Azerbaijan (SOCAR) have signed an agreement to sell a 15% participating interest each in the Absheron gas field to ADNOC, TotalEnergies said on Friday.

After completion of the transaction, subject to the approval by the relevant authorities, TotalEnergies and SOCAR will each own 35% in Absheron, and ADNOC will have 30% in the gas and condensate field, where first gas was achieved last month. Financial details of the transaction are not being disclosed.

ADNOC’s investment in the Caspian region is part of the strategy of the UAE’s state oil and gas giant to expand on international gas markets.

“We believe this strategic partnership with SOCAR and TotalEnergies, unlocks the potential of the Caspian region for decades to come and complements a broader energy collaboration between the UAE and Azerbaijan that will accelerate the growth of the global renewable energy sector as both countries take bold steps to transition towards a lower-carbon future,” Musabbeh Al Kaabi, Executive Director of Low Carbon Solutions and International Growth at ADNOC, said in a statement carried by the Emirates News Agency, WAM.

Last month, TotalEnergies and its joint venture partner SOCAR began natural gas production from the Absheron gas and condensate field. The first phase of the development of the field has a production capacity of 4 million cubic meters of gas per day and 12,000 barrels per day of condensate.

The gas will be sold on the domestic market in Azerbaijan, which could free more gas from other Azerbaijani fields for exports, analysts say.

“TotalEnergies is pleased to welcome ADNOC, one of its strategic partners, into the Absheron gas field, where production of the first phase started in early July, and which offers a significant further development potential to meet the growing gas demand”, Nicolas Terraz, President, Exploration & Production at TotalEnergies, said today, commenting on the deal with the UAE firm.

By OilPrice.com, August 11, 2023

Next-Gen Biofuels: Harnessing the Power of GMOs for a Sustainable Future – EnergyPortal.eu

The quest for sustainable and renewable energy sources has been a pressing concern for governments, industries, and researchers worldwide. As we face the growing threat of climate change and depleting fossil fuel reserves, the need for cleaner and more efficient energy alternatives becomes increasingly urgent. One promising avenue in this pursuit is the development of next-generation biofuels, which harness the power of genetically modified organisms (GMOs) to produce energy-rich fuels from biomass.

Biofuels, such as ethanol and biodiesel, have been in use for several years as a means to reduce greenhouse gas emissions and dependence on fossil fuels. However, conventional biofuels are primarily derived from food crops, such as corn and sugarcane, which has raised concerns about the impact on food security and land use. Next-generation biofuels aim to address these issues by utilizing non-food biomass, such as agricultural residues, forestry waste, and dedicated energy crops, as feedstocks for fuel production.

One of the key challenges in producing next-generation biofuels is the efficient conversion of biomass into fermentable sugars, which can then be processed into fuels. This process typically involves breaking down the complex carbohydrates in plant cell walls, known as lignocellulose, into simpler sugars. However, lignocellulose is highly resistant to degradation, making this conversion process difficult and energy-intensive.

This is where GMOs come into play. By genetically engineering microorganisms, such as bacteria and yeast, scientists can enhance their ability to break down lignocellulose and ferment the resulting sugars into biofuels. These modified organisms can produce enzymes that are more efficient at degrading biomass, reducing the energy input required for the process and increasing the overall yield of biofuels.

One example of this approach is the development of genetically modified strains of the yeast Saccharomyces cerevisiae, which is commonly used in the production of ethanol. Researchers have introduced genes from other microorganisms that enable the yeast to ferment both glucose and xylose, two major sugars found in lignocellulosic biomass. This modification allows for the simultaneous fermentation of both sugars, increasing the efficiency of biofuel production and reducing the overall cost.

Another promising avenue for next-generation biofuels is the use of algae as a feedstock. Algae can grow rapidly and produce large amounts of biomass, making them an attractive source of renewable energy. Moreover, algae can be cultivated on non-arable land and in wastewater, reducing competition with food crops and providing additional environmental benefits. Genetic engineering can further enhance the potential of algae for biofuel production by increasing their lipid content, which can be converted into biodiesel, or by enabling them to directly produce biofuels, such as ethanol or butanol.

While the potential benefits of next-generation biofuels are significant, there are also concerns about the environmental and social impacts of GMOs. Critics argue that the release of genetically modified organisms into the environment could have unintended consequences, such as the spread of antibiotic resistance or the disruption of natural ecosystems. Additionally, there are concerns about the concentration of power in the hands of a few biotechnology companies, which could lead to monopolistic practices and limit access to these technologies for developing countries.

Despite these challenges, the development of next-generation biofuels offers a promising path towards a more sustainable and secure energy future. By harnessing the power of GMOs, we can unlock the full potential of biomass as a renewable energy source, reducing our reliance on fossil fuels and mitigating the impacts of climate change. As research and development in this field continue to advance, it is crucial that we also engage in an open and transparent dialogue about the risks and benefits of these technologies, ensuring that they are deployed responsibly and equitably for the benefit of all.

By energyportal.eu, August 15, 2023

In the midst of the global shift towards green energy, the Oil Trader iFex, which is an oil trading platform, trading of oil has faced significant changes and challenges. As the world becomes more conscious of environmental sustainability, the oil industry is compelled to adapt to new regulations, consumer demands, and emerging energy technologies. This article explores the dynamic landscape of trading oil in the era of green energy transition, highlighting key developments, market trends, and strategies employed by businesses in this evolving industry.

The Green Energy Transition

Understanding the Transition

The green energy transition is a continuous and crucial process that involves shifting away from conventional energy sources reliant on fossil fuels, towards cleaner and renewable alternatives. This transition is motivated by multiple factors, including the urgency to address climate change, minimize greenhouse gas emissions, and secure a sustainable energy future. As nations across the globe commit to achieving carbon neutrality, the demand for oil is anticipated to undergo significant changes.

Impact on Oil Trading

• Decreased Demand: With the increasing adoption of renewable energy sources, the demand for oil has witnessed a decline. As electric vehicles become more prevalent, the transportation sector, which heavily relies on oil, is gradually shifting towards greener alternatives. Additionally, advancements in energy-efficient technologies have reduced the overall energy consumption in various industries, further impacting oil demand.
• Volatility in Prices: The transition to green energy has introduced greater price volatility in the oil market. Fluctuations in demand and supply, coupled with geopolitical factors, have created an unpredictable trading environment. As governments implement stricter environmental regulations and incentives for renewable energy, oil prices can experience sharp fluctuations.

• Emergence of ESG Factors: Environmental, Social, and Governance (ESG) factors have gained prominence in the investment landscape. Investors are now considering a company’s environmental impact, social responsibility, and corporate governance practices when making investment decisions. Oil companies are under pressure to align with sustainable practices and demonstrate their commitment to reducing carbon emissions.

Strategies for Successful Oil Trading

To navigate the challenges and seize opportunities in the era of green energy transition, oil trading businesses must adopt comprehensive strategies that integrate sustainability, innovation, and market intelligence. The following strategies can help oil traders thrive in this changing landscape:

Diversification

In light of the persistent decline in long-term oil demand, it is prudent for traders to expand their investment portfolios by including assets related to renewable energy. By allocating resources to wind, solar, and hydroelectric projects, traders can establish a safeguard against diminishing oil revenues. Diversifying investments enables traders to capitalize on the expanding renewable energy market, while simultaneously mitigating the risks associated with a contracting oil industry.

Technological Innovation

For oil traders aiming to navigate the green energy transition, embracing technological advancements is of utmost importance. By harnessing the power of artificial intelligence, machine learning, and data analytics, traders can access valuable insights into market dynamics, optimize their supply chains, and uncover untapped opportunities. Moreover, exploring and investing in emerging technologies like carbon capture and storage allows traders to establish themselves as pioneers in the realm of sustainable energy solutions. By embracing these advancements, oil traders can proactively adapt to the changing landscape and contribute to a greener and more sustainable future.

Collaboration and Partnerships

To stay competitive, oil traders should foster collaboration and partnerships within the renewable energy sector. Engaging in joint ventures, strategic alliances, and research collaborations can facilitate knowledge sharing and help traders gain expertise in renewable energy technologies. Collaborations can also open avenues for diversified revenue streams and enable access to new markets.

Sustainable Practices and Reporting

Incorporating sustainable practices into daily operations is essential for oil traders aiming to enhance their environmental credentials. Implementing energy-efficient measures, minimizing carbon emissions, and adopting responsible waste management practices are key steps towards sustainability. Additionally, transparent reporting on environmental performance allows traders to build trust with stakeholders and meet the growing demand for ESG-focused investments.

Conclusion

As the world transitions towards a greener future, the trading of oil faces a paradigm shift. The decline in oil demand, increased price volatility, and the rise of ESG factors necessitate strategic adaptations by oil traders. Diversification, technological innovation, collaboration, and sustainable practices are critical for navigating this changing landscape successfully. By embracing these strategies, oil traders can position themselves as leaders in the era of green energy transition and thrive amidst evolving market dynamics.

By THE NATION, August 15, 2023

The Netherlands was the top destination for US liquefied natural gas supplies for the second month in a row in June, according to the Department of Energy’s newest LNG monthly report.

The report shows that US terminals shipped 45.9 Bcf of LNG to the Netherlands in June, 45.6 Bcf to France, 24.7 Bcf to Japan, 23.6 Bcf to China, and 22.7 Bcf to Argentina.

These five countries took 49.5 percent of total US LNG exports in June.

In May, US terminals shipped 64.5 Bcf of LNG to the Netherlands, while the UK was the top destination for US LNG supplies for six months in a row prior to that.

The Netherlands has expanded its capacity with the launching of Gasunie’s Eemshaven FSRU-based LNG terminal that mostly receives cargoes from the US.

The country’s first FSRU-based terminal adds to the Gate LNG import facility in Rotterdam, also operated by Gasunie and Vopak.

US LNG exports rise 9.1 percent

The US exported in total 327.8 Bcf of LNG in June, up by 9.1 percent compared to the same month last year and a drop of 10.6 percent from the prior month, the DOE report shows.

US terminals shipped 108 LNG cargoes in June, compared to 96 cargoes in June 2022 and 127 cargoes in May this year, according to the report.

Sempra’s Cameron LNG plant sent 29 shipments during June, Cheniere’s Sabine Pass plant sent 27 cargoes and its Corpus Christi terminal shipped 18 cargoes.

In addition, Freeport LNG sent 21 cargoes, Cove Point LNG sent 7 cargoes, and Elba Island LNG dispatched 6 shipments.

4924 LNG cargoes

According to DOE’s report, the weighted average price by export terminal reached 7.09/MMBtu in June.

Moreover, the report said that in the period from February 2016 through June 2023, the US exported 4924 cargoes or 15,696.5 Bcf to 44 countries.

South Korea remains the top destination for US LNG with 529 cargoes, followed by Japan with 401 cargoes, the UK with 390 cargoes, France with 377 cargoes, and Spain with 375 cargoes.

Besides these five countries, the Netherlands, China, India, Turkey, and Brazil are in the top ten as well.

By LNG Prime, August 18, 2023

Energy Transfer LP (NYSE: ET) (“Energy Transfer”) and Crestwood Equity Partners LP (NYSE: CEQP) (“Crestwood”) announced today that the parties have entered into a definitive merger agreement pursuant to which Energy Transfer will acquire Crestwood in an all-equity transaction valued at approximately $7.1 billion, including the assumption of $3.3 billion of debt, based on the closing price on August 15, 2023.

Under the terms of the agreement, Crestwood common unitholders will receive 2.07 Energy Transfer common units for each Crestwood common unit. The transaction is expected to close in the fourth quarter of 2023, subject to the approval of Crestwood’s unitholders, regulatory approvals, and other customary closing conditions. Upon closing, Crestwood common unitholders are expected to own approximately 6.5% of Energy Transfer’s outstanding common units.

Complementary Assets

Crestwood’s system includes gathering and processing assets located in the Williston, Delaware and Powder River basins, including approximately 2.0 billion cubic feet per day of gas gathering capacity, 1.4 billion cubic feet per day of gas processing capacity and 340 thousand barrels per day of crude gathering capacity. If consummated, this transaction would extend Energy Transfer’s position in the value chain deeper into the Williston and Delaware basins while also providing entry into the Powder River basin. These assets are expected to complement Energy Transfer’s downstream fractionation capacity at Mont Belvieu, as well as its hydrocarbon export capabilities from both its Nederland Terminal in Texas and the Marcus Hook Terminal in Philadelphia, Pennsylvania.

This transaction is also expected to provide benefits to Energy Transfer’s NGL & Refined Products and Crude Oil businesses with the addition of strategically located storage and terminal assets, including approximately 10 million barrels of storage capacity, as well as trucking and rail terminals. These systems are anchored by predominantly investment-grade producer customers with firm, long-term contracts, and significant acreage dedications.

Positive Financial Impact

The transaction is expected to be immediately accretive to distributable cash flow per unit as well as neutral to Energy Transfer’s leverage metrics upon closing. Similar to Energy Transfer, Crestwood’s cash flows are supported by primarily fee-based revenues from long-term contracts with investment-grade counterparties. In addition, with the increased scale and strengthened balance sheet, Energy Transfer expects to be able to improve on the current cost of financing for the acquired debt securities. Structured as a 100% unit-for-unit exchange, the transaction is tax-efficient to Crestwood unitholders and is anticipated to position both partnerships for long-term value upside through the combination.

Energy Transfer also expects to achieve at least $40 million of annual run-rate cost synergies before additional benefits of financial and commercial opportunities.

Compelling Value Creation for Crestwood Unitholders

Energy Transfer’s premier business model, strong balance sheet and backlog of growth opportunities supports the potential for significant additional value creation over time. The tax-efficient transaction is expected to provide Crestwood unitholders a benefit to distributions per unit and an opportunity to participate in Energy Transfer’s targeted annual distribution per unit growth rate of 3-5%.

Advisors

BofA Securities acted as sole financial advisor to Energy Transfer and Kirkland & Ellis LLP acted as legal counsel. Intrepid Partners, LLC and Evercore acted as financial advisors to Crestwood and Vinson & Elkins LLP acted as legal counsel.

Crestwood Investor Call

Crestwood management will host a conference call for investors and analysts of Crestwood today at 9:00 a.m. Eastern Time (8:00 a.m. Central Time), which will be broadcast live over the Internet. Investors will be able to access the webcast via the “Investors” page of Crestwood’s website. Please log in at least ten minutes in advance to register and download any necessary software. A replay will be available shortly after the call for 90 days.

By Energy Transfer, August 23, 2023

Enbridge Inc. (NYSE: ENB) and (TSE: ENB) has received an average rating of “Moderate Buy” by six brokerages covering the stock, according to a report by Bloomberg. Out of the six investment analysts, three have assigned a hold rating while the remaining three have given a buy rating to the company. The average 12-month target price based on analysis from various brokerages is $57.67.

On Friday, August 14, 2023, NYSE ENB opened at $36.72. Over the past fifty days, the business has maintained a moving average price of $36.90 and over the last 200 days, it recorded an average moving price of $38.01. Enbridge’s one-year low stands at $35.02 with its highest point reaching $44.55 during the same period.

Notably, Enbridge holds a debt-to-equity ratio of 1.27, indicating its utilization of borrowed funds in relation to equity investments. The company boasts a quick ratio of 0.51 and current ratio of 0.64, suggesting its ability to meet short-term obligations using assets that can be readily converted into cash. With a market capitalization of $74.27 billion, Enbridge operates with a price-to-earnings ratio of 26.23 and a beta value of 0.84.

Enbridge Inc., along with its subsidiaries, serves as an energy infrastructure company that operates through five main segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation, and Energy Services.

The Liquids Pipelines segment primarily focuses on operating pipelines and associated terminals for transporting diverse grades of crude oil as well as other liquid hydrocarbons across Canada and the United States.

As an energy infrastructure leader in North America, Enbridge aims to ensure reliable access to energy resources for customers while considering the environmental impact. The company demonstrates its commitment to sustainability and renewable energy through its Renewable Power Generation segment, which complements its traditional energy operations.

Enbridge’s Gas Transmission and Midstream segment focuses on transporting natural gas, enabling it to meet the growing demand for this cleaner fuel source. The company’s Gas Distribution and Storage segment manages regulated natural gas distribution systems in Canada and contributes to improving environmental standards within the industry.

Furthermore, Enbridge offers Energy Services, expanding its portfolio to include a range of energy-related activities such as marketing, supply and logistics services.

In conclusion, Enbridge Inc. emerges as an important player in the energy infrastructure sector. With an average “Moderate Buy” rating from brokerages and a target price of $57.67 according to analyst predictions, the company presents potential investment opportunities. As it continues to navigate the complexities of the energy industry, Enbridge’s strategic segments allow it to adapt to changing market demands while promoting sustainable practices in line with environmental considerations.

By Best Stocks, August, 2023

Three numbers encapsulate the story of Saudi Aramco since its initial public offering (IPO) in December 2019. The first is that its net income for the second quarter (Q2) of this year was US$30.1 billion. The second is that its regular quarterly dividend was US$19.5 billion. And the third is that on top of this regular dividend, it will also start paying an additional promised performance-linked dividend of US$9.9 billion in the next quarter.

So, even with a Brent oil price averaging around US$80 per barrel (pb) in Q2 – an historically elevated price for ‘non-crisis’ oil markets in recent years – 65 percent of its net income went on a debt to shareholders, in the form of dividends.

If the net income stayed the same in Q3, this debt payment would rise to 98 percent. The story is, then, that due to the ill-conceived IPO thought up in late 2015/early 2016 by Crown Prince Mohammed bin Salman (MbS), Saudi Arabia’s corporate crown jewel must continue to operate under a crushing debt burden.

Because of that, it is limited in the new exploration and development work it can do, which cripples its ability to increase its reserves and its production numbers. Because of that, it will keep having to act as the instrument through which Saudi Arabia continues to push oil (and gas) prices higher. And because of that, the U.S. at some point will fully enact the ‘No Oil Producing and Exporting Cartels’ (NOPEC) bill and destroy Saudi Aramco as we know it today. 

It should be remembered that back in late 2015/early 2016, MbS conceived the plan to IPO Aramco as a key part of his strategy to take over the position of heir-designate to King Salman from Prince Muhammad bin Nayef (MbN). In theory, the idea had several positive factors going for it that would benefit MbS. First, it could raise a lot of money, part of which might be used to offset the economically disastrous effect on Saudi Arabia of the 2014-2016 Oil Price War, as analysed in my new book on the new global oil market order.

Second, it could boost Saudi Arabia’s reputation in the global financial markets, which would help with further IPOs and would boost foreign investment into the country’s domestic capital markets more broadly. And third, both new funding flows could be used as part of the ‘National Transformation Program’ 2020 – in turn part of Saudi’s ‘Vision 2030’ development plan – that sought to diversify the Kingdom’s economy away from its reliance on oil and gas exports. After a few months of further discussion, MbS assured senior Saudis that he could absolutely ensure the flotation of 5 percent of Aramco, which he said would absolutely raise at least US$100 billion in much-needed funds for Saudi Arabia.

This, in turn, would place a valuation on the entire company of at least US$2 trillion. In addition, MbS said, Saudi Aramco would absolutely be listed on one of the world’s major stock exchanges, with the New York Stock Exchange and the London Stock Exchange being the two preferred options.

This theory ran into practical difficulties from the moment that major Western investors began to look at Aramco in more depth. For a start, the crude oil production figures that Saudi Arabia had long bandied around as being fact were evidently no such thing, as forensically analysed in my new book.

Far from being able to produce 10, 11 or 12 or more million barrels per day (bpd), Saudi Arabia struggled to produce anything over 9 million bpd. To be accurate: from 1 January 1973 to Monday 14 August 2023, Saudi Arabia’s average crude oil production is 8.257 million bpd. This means that its equally much-vaunted spare capacity of around 2 million bpd is also not true, founded as it is on a false baseline crude oil production capability.

Additionally concerning then, as now, were Saudi Arabia’s equally fantastical claims about its oil reserves. Specifically, at the beginning of 1989, the country claimed proven oil reserves of 170 billion barrels. Just one year later, and without the discovery of any major new oil fields, it claimed proven oil reserves of 257 billion barrels, an increase of 51.2 percent. Shortly afterwards, Saudi Arabia’s proven oil reserves miraculously increased again, this time to just over 266 billion barrels, again without the discovery of any major new oil fields. Proven oil reserves increased once more in 2017, to 268.5 billion barrels, again with no new major oil finds being discovered.

At the same time as these increases being announced, the country was extracting an average of 8.162 million bpd. Therefore, from 1990 (the year in which Saudi Arabia’s claimed proven oil reserves jumped from 170 billion barrels to 257 billion barrels), to 2017 (the year when Saudi Arabia was claiming proven oil reserves of 268.5 billion barrels), Saudi Arabia had physically removed from the ground forever an average of just over 2.979 billion barrels of crude oil every year.

The total amount of crude oil permanently removed from the beginning of 1990 to the beginning of 2017, was, then, 80.43 billion barrels. In short, from 1990 to 2017, Saudi Arabia’s official crude oil reserves number had gone up 98.5 billion barrels, despite there being no new oil finds and it physically removing 80.43 barrels forever. 

These facts – together with Aramco being used as a key source of funding for various socio-economic projects that had nothing to do with its business and would destroy shareholder value – meant that no major global financial players wanted to invest in Aramco and not a single major Western or Eastern stock market wanted Aramco to list on it.

Given this, the stage was set for a series of events that help to define the new global oil market order, as also analysed in depth in my new book on that subject. One of these was a face-saving offer for MbS from China that he has never forgotten and that has underpinned Saudi Arabia’s drift towards China since then. Another was the expediting of Saudi Arabia’s move away from the U.S. and towards Russia that had been gathering pace since the end of the Second Oil Price War in 2016.

Even more specifically for Saudi Aramco, it meant that MbS had to offer massive incentives to investors to buy any of the IPO. One of these was a guarantee by the Saudi government that, whatever happened, it would pay a US$75 billion dividend payment in 2020, split equally into payments of US$18.75 billion every quarter. These payments, of course, have now risen and will be made even more destructive to Aramco’s basic functioning by the addition of extra performance-linked dividends.

These are designed to target 50-70 percent of annual free cash flow, net of the base dividend, and other amounts including external investments, according to Aramco’s chief executive officer, Amin Nasser.

The highly precarious financial tightrope on which Aramco finds itself also means that Saudi Arabia has no alternative but to keep pushing oil (and gas) prices ever higher. And, as day follows night, this means a collision course with the U.S. and its allies, who regard rising energy prices as direct threats to their economic and political well-being. This comes on top of an increasingly antagonistic relationship between the U.S. and Saudi Arabia, following the de facto break-up of their foundation stone 1945 agreement.

The mechanism to destroy Aramco in its current form is already in place, in the form of the NOPEC bill, as also analysed in my new book. This legislation would open the way for sovereign governments to be sued for predatory pricing and any failure to comply with the U.S.’s antitrust laws. OPEC is a de facto cartel, Saudi Arabia is its de facto leader, and Saudi Aramco is Saudi Arabia’s key oil company.

The enactment of NOPEC would mean that trading in all Saudi Aramco’s products – including oil – would be subject to the antitrust legislation, meaning the prohibition of sales in U.S. dollars. It would also mean the eventual break-up of Aramco into smaller constituent companies that are not capable of influencing the oil price.

OilPrice.com by Simon Watkins, August 23, 2023

Asian refiners are on the hunt for crude oil to replace Kuwaiti supply as the OPEC producer cuts exports by nearly a fifth to feed its huge new refinery, which is driving up prices for other sour crudes and likely to squeeze profit margins.

Lower Kuwaiti exports follow cuts from OPEC kingpin Saudi Arabia that have pushed Brent prices close to $90 a barrel and left little wriggle room for Asia’s refiners, reliant on the Middle East for more than two-thirds of crude imports.

Chinese refiners, which have invested heavily in new plants designed to process sour oil, are especially exposed.

Discounted oil from Russia has eased some of the pain, replacing some Kuwaiti supply, largely to China and India.

But most of Kuwait’s customers will have to pay up for similar quality oil from other suppliers such as Saudi Arabia, Iraq and the United Arab Emirates or buy more expensive sweet grades from other regions.

“Saudi Arabia and the UAE are the top contenders for filling the supply gap in the Middle East due to their production and export of medium sour barrels,” said Janiv Shah, an analyst at consultancy Rystad Energy.

“It is improbable that they will be able to entirely meet the demand.”

Sustained output cuts from OPEC producers and their allies and new refining capacity designed to process sour crude could lead to tight supply until the end of 2024, Energy Aspects analyst Sun Jianan said.

Kuwait’s crude shipments shrank by about 10% to 1.61 million barrels per day (bpd) in January-July from the same period in 2022 as its Al Zour refinery ramped up, according to Kpler data.

Exports to Taiwan, China and India dropped more than 17% during the same period, while volumes for Pakistan, the Philippines and Thailand fell to zero, the data showed.

In the second half, Kuwait will reduce its exports by up to 300,000 bpd, down 18% from the first half, as it diverts supply to the 615,000 bpd Al Zour plant, which cranked up its third and final crude distillation unit (CDU) in July, according to consultancies FGE, Energy Aspects, Rystad Energy and S&P Global Commodity Insights.

Additionally, Kuwait’s joint venture 230,000 bpd Duqm refinery in Oman is scheduled to start operation by end-2023, which could reduce Kuwaiti crude exports by a further 100,000 bpd to 200,000 bpd in 2024, the consultancies said.

Kuwait Petroleum Corp (KPC) has notified buyers that volumes could fluctuate each month and could be further reduced once Al Zour is at full operation, a source familiar with the matter said.

KPC did not respond to Reuters’ inquiry seeking comment.

THIRSTY REFINERS

The supply squeeze comes as over 1 million barrels per day (bpd) of new Chinese refining capacity comes online. The 320,000-bpd Shenghong refinery and PetroChina’s (601857.SS) 400,000-bpd Guangdong plant started commercial operations earlier this year, while Yulong Petrochemical’s 400,000-bpd refinery is scheduled to start trial runs in the fourth quarter.

“Almost all refineries in China are designed to process mainly medium sour crude oil,” said a Chinese oil trader, adding that tight supply would depress margins at Chinese refineries already struggling with tepid product demand.

Exports to key buyers – China, Japan, South Korea, India and Taiwan – are expected to drop further from October once Kuwait resumes supply to its Vietnam joint venture Nghi Son refinery following two months of scheduled maintenance work.

“The supply reduction in 2023 was factored in our term contract discussed last year,” KY Lin, spokesperson at Taiwan Formosa Petrochemical Corp (6505.TW) said, adding that negotiations for 2024 supply will commence soon.

Formosa could replace Kuwaiti supply with grades such as Iraq’s Basra Medium, Qatar’s al-Shaheen and Oman crude, Lin said, adding it can also process U.S. light sweet crude.

PRICES CLIMB

Middle East crude exports are expected to slump by nearly 8%, or up to 1.35 million bpd, in the second half of 2023 from the first half, said James Forbes, an analyst at FGE.

Refiners are already feeling the pinch as Middle East producers have hiked official selling prices (OSPs) for July to September supplies.

In signs supply is tightening, in August, benchmark Dubai’s first month was trading $2.11 a barrel higher than the third month, compared with a difference of $1.14 in June.

And the discount for sour Dubai crude against sweet Brent crude has narrowed sharply to around $1 a barrel from nearly $6 at the start of the year and briefly even fetched a small premium to Brent in June.

“The Brent-Dubai spread has recently widened but we do see some potential to narrow again if Asian demand strengthens further,” said Shah.

Reuters by Muyu Xu, August 23, 2023

Africa’s secret weapon in the global energy race – green hydrogen. The continent has the potential to flip the script, transitioning from a fossil fuel consumer to a green energy titan.

The global energy transition has a burgeoning champion – green hydrogen. Often overshadowed by solar and wind, this renewable resource is increasingly crucial for a sustainable future.

The current global hydrogen market is over $130 billion. The World Bank predicts an annual growth of over 9%. Although the surge is likely niche until 2030, the growing demand for renewable energy means that green hydrogen could accelerate rapidly thereafter. Regions with low-cost markets and abundant renewable resources, like Africa, become attractive production markets.

The principle is straightforward. Use renewable energy sources to split water into hydrogen and oxygen. The result? A fuel source that releases only water upon consumption. The applications are limitless, from powering cars to heating homes.

What is green hydrogen?

At its core, green hydrogen is simple. It’s hydrogen, the universe’s most abundant element, produced environmentally friendly. But how do we make it, and why does it matter?

Green hydrogen is generated via electrolysis, which splits water into hydrogen and oxygen using electricity. But for the hydrogen to be ‘green’, the electricity must come from renewable sources, like wind or solar power. The only byproduct is oxygen, a harmless gas we breathe every day.

In contrast, most hydrogen produced today is ‘grey’ or ‘blue’. It’s derived from fossil fuels, mainly natural gas, and the process releases significant amounts of carbon dioxide, a harmful greenhouse gas. Green hydrogen represents a shift away from this environmentally damaging status quo. However, green hydrogen faces challenges. Currently, it accounts for less than 1% of all hydrogen production. The main obstacle is the production cost, which is not yet competitive compared to grey or blue hydrogen. Most green hydrogen is used in energy-intensive industries like steel and chemical manufacturing.

The path to economic viability for green hydrogen lies in a combination of technological advancements, increased global development investment, and legislative commitments. These factors are expected to make green hydrogen a serious market contender in the coming decades.

Africa is fast becoming a frontrunner in the green hydrogen race.

“FROM SOLAR TO BIOGAS, FROM WIND TO BATTERY STORAGE, THESE INVESTMENTS ARE LEADING ONE OF THE MOST IMPORTANT GROWTH INDUSTRIES IN OUR COUNTRY.”—South African President Cyril Ramaphosa

Blessed with an abundance of sunlight and wind, Africa is ideally positioned to exploit green hydrogen’s potential. Groundbreaking projects are taking shape across the continent.

From the ambitious SA-H2 venture announced recently in South Africa to a green hydrogen initiative between Namibia and Botswana, these projects signal profound economic opportunities for job creation, growth, and sustainable development.

The Africa Green Hydrogen Alliance (AGHA), established in 2022, emphasizes Africa’s competitive edge due to low production costs. Masopha Moshoeshoe, Green Economy Specialist at the Investment and Infrastructure Office in the Presidency of South Africa, stated in a press release issued by the United Nations Framework Convention on Climate Change on the launch of the alliance: “Green hydrogen has the potential to marry South Africa’s significant mineral endowment with its significant renewable revolutionize its energy sector. The SA-H2 fund, which aims to establish a hydrogen ecosystem in South Africa, is at the forefront of this exciting transition.

The $1-billion fund was announced in June as part of a joint effort between the Netherlands, Denmark and South Africa.

“From solar to biogas, from wind to battery storage, these investments are leading one of the most important growth industries in our country,” said South African President Cyril Ramaphosa at the announcement in Pretoria.

Blended finance is a key concept underpinning this project.

Andrew Johnstone, the CEO of Climate Fund Managers, explains to FORBES AFRICA that it refers to the strategic use of public

or philanthropic funds to mobilize private sector investment in sustainable development. In the context of SA-H2, this means bringing together private and public funding to make projects economically viable.

“They (the funds) act as a “spark” to ignite and mobilize belief, technology, and other forms of capital,” says Johnstone.

“The SA-H2 project should be seen as part of a larger effort across the region to leverage blended finance for sustainable energy development.”

The project is financed by a combination of different forms of capital, each with a different return requirement. This includes donor capital, commercial capital, and guarantees. By bringing these diverse sources of funding together, the project achieves a lower average cost of capital.

Johnstone explains, “Blended finance means in this context… to bring in capital in defined proportions in pursuit of a low average cost of capital.” Notably, this blended finance model also allows

for differential risk sharing. If a project underperforms, certain investors may not receive a return, thus sharing the risk in a structured and agreed-upon manner.

Once a project is up and running, it has an obligation to repay its funders, whether those are lenders through equity or energy loans, or others through dividends. Johnstone describes this repayment as a “waterfall”, with those who took the least risk and accepted a lower return being repaid first.

It’s important to highlight the transparency and regulation of these funds. They operate similarly to companies, are regulated by appropriate bodies, and are overseen by advisory boards and investment committees populated by investors or independent representatives. This governance structure ensures a high level of oversight and accountability.

Another key aspect of the SA-H2 project is the co-existence of different funds. The development side of the project is planned with public contracts and equity funds in mind. This co-existence helps redefine what “bankable” means in the context of these projects, potentially accelerating the implementation process.

These blended finance projects aim to create scalable, replicable, and improvable markets, serving as a catalyst for broader change in the energy sector.

South Africa’s SA-H2 initiative is not alone in its ambition.

Namibia is also making significant strides in the green hydrogen sector.

Noteworthy is a project in the Tsau Khaeb National Park, near Lüderitz, with the Namibian government proactively confirming a 24% equity stake in this $10 billion project, almost equivalent to the country’s gross domestic product.

This initiative, led by Hyphen Hydrogen Energy, is gaining momentum with several key partners signing a Memorandum of Understanding to collaborate on the necessary infrastructure for Namibia’s green hydrogen production ambitions.

“Namibia is perfectly positioned to produce low-cost green hydrogen and ammonia for domestic and international markets,” said Frans Kalenga, Technical Advisor to the Minister of Mines and Energy of Namibia on Namibia’s joining of the AGHA, in a press statement. “[It] provides a platform for us to collaborate with neighboring countries. AGHA’s report reaffirms the potential, and provides important recommendations on how we can work together to unlock the extraordinary potential.”

This potential is estimated to generate 15,000 jobs during the direct construction of the project, and a further 3,000 created permanently when the project is fully underway.

Namibia’s Vice President Nangolo Mbumba acknowledged the global transition toward green hydrogen, as well as the country’s abundant natural resources and landscape assisting in the suitability of its development as an industry.

“We are now approaching new fields of economy. Everybody is talking about green hydrogen. Three-four years ago, even the pronunciation was not known,” he said, speaking during the Forbes Under 30 Summit Africa in Botswana in April. “People need energy, and plenty of it,” he continued, acknowledging the international collaboration, local training and investment in education to develop the skills needed for green hydrogen initiatives.

“If we succeed, we will produce enough energy for the whole region of southern Africa,” added Mbumba.

Policy and profitability

A confluence of factors is propelling the growth of green hydrogen in Africa. The continent’s abundant natural resources, particularly sunlight and wind, provide an ideal setting for green hydrogen production. Escalating global demand for clean energy is creating opportunities for African nations to emerge as green hydrogen exporters. Moreover, policymakers are increasingly recognizing green hydrogen’s potential in achieving climate goals and fostering sustainable development.

The advent of green hydrogen presents a substantial opportunity for job creation across the African continent.

With Africa positioned as a potential global exporter of green hydrogen, the sector could become a significant contributor to the continent’s GDP. Moreover, the revenues generated from green hydrogen exports could be reinvested into local communities, improving infrastructure, education, and healthcare.

An analysis by McKinsey on behalf of AGHA identified a possible increase in GDP for member countries of between $66 billion and $126 billion by 2050, as well as up to 4.2 million new jobs as a result of green hydrogen investments.

The potential offers a pathway for nations to build a more resilient future, mitigating economic risks tied to unpredictable oil and gas prices. By developing a green hydrogen industry, nations could foster local technological innovation and enhance their manufacturing capabilities.

This prospect could shift Africa’s role in the global energy landscape, transitioning from a net importer of fossil fuels to a significant exporter of clean energy.

However, the promise of green hydrogen is not solely economic. It also offers a sustainable solution that addresses the pressing issues of economic development and climate change simultaneously.

Green Hydrogen is a tool for survival

As the world stands on the brink of a pivotal moment in its fight against climate change, green hydrogen emerges as a powerful ally. As a clean, carbon-free source of energy, green hydrogen can replace fossil fuels in various sectors, leading to a dramatic reduction in greenhouse gas emissions.

In Africa, where climate change threatens both people and ecosystems, investing in green hydrogen will not only enable nations to contribute to global emission reductions but also helps them build resilience against climate change impacts at home.

Even though Africa is responsible for only a fraction of global carbon emissions, the continent is actively taking steps to reduce its carbon footprint.

Green hydrogen can play a significant role in these efforts, replacing carbon-intensive fuels across the economy and leading to substantial emission reductions.

Moreover, exporting green hydrogen to other continents could further reduce global carbon emissions, enhancing Africa’s contribution to the global fight against climate change.

Renewable energy has been identified by many African countries as a key element of their climate change mitigation strategies. Incorporating green hydrogen into these strategies could hasten their progress towards achieving climate goals.

By offering a means to store and transport renewable energy, green hydrogen could solve one of the significant challenges of the energy transition: the intermittency of wind and solar power. This could facilitate a more extensive and efficient use of renewable energy, driving further emission reductions.

At the heart of the global energy transition, green hydrogen stands out as a beacon of hope. This renewable resource, making waves in the energy sector worldwide, has found a promising home in Africa. The continent, blessed with abundant wind and sunlight, is quickly gaining recognition as a potential global leader in green hydrogen production.

Pioneering projects across the continent signify Africa’s commitment to embracing green hydrogen.

Yet, the narrative of green hydrogen extends beyond economics. It is a tale of resilience and innovation in the face of climate change. Looking ahead, it’s clear that green hydrogen could reshape Africa’s energy landscape, transforming the continent from a net importer of fossil fuels to a major exporter of clean energy. Such a transformation could not only stimulate economic growth but also enhance Africa’s influence in global energy and climate policy discussions.

For Africa, the opportunity is now. It’s an opportunity that calls for further research, investment, and policy support, for the sake of the continent and the world.

Africa Forbes by Yeshiel Panchia, August 23, 2023