Tag: tank terminals

Aramco’s journey reflects not just the shift in Saudi energy policy but a broader reimagining of what national oil companies can achieve on the global stage.

Saudi Aramco is not only the largest oil producer globally but also the most profitable business, surpassing tech giants like Apple and Microsoft. Aramco is evolving far beyond its traditional role, now positioning itself at the forefront of economic diversification, technological innovation, and sustainability, aligning with the broader vision set forth by Crown Prince Mohammed bin Salman to transform the Saudi economy and reduce its dependence on oil. This shift has turned Aramco into a key player in reshaping the kingdom’s energy landscape and broader strategic interests.

Driving Vision 2030

Aramco, Saudi Arabia’s economic crown jewel, is central to the ambitions of Vision 2030, which aims to diversify the economy and prepare for a post-oil future. As the primary source of funding for the Public Investment Fund, Aramco’s recent financial activities, including its record-breaking initial public offering in 2019 and a secondary share offering in 2023, are crucial in channeling resources into non-oil sectors. Funds raised through these offerings are being reinvested to support an array of domestic and international projects that are expected to reduce the kingdom’s reliance on oil and build a more resilient, diversified economy.

In a strategic move in March, Saudi Arabia transferred 8% of Aramco’s shares to the PIF – valued at around $163.6 billion, reflecting Aramco’s market worth – aiming to bolster the fund as the kingdom prepares for a possible IPO of the company. This transaction could provide additional financing for Vision 2030. The transaction raised the combined stake of the PIF and its affiliates in Saudi Aramco to 16%, equating to $327 billion in value.

New Discoveries and a Renewed Gas Focus

Aramco recently announced the discovery of two unconventional oil fields, an Arabian light crude reservoir, two natural gas fields, and two gas reservoirs in the Eastern Province and Empty Quarter. Aramco is set to invest between $48 billion and $58 billion in 2024, prioritizing exploration efforts even as it holds off on further expanding its oil production capacity.

Complementing these exploration efforts, the company is advancing its natural gas ambitions through strategic investments and contracts. Aramco has secured contracts exceeding $25 billion for the expansion of the Jafurah gas field and the third phase of its main gas network upgrade. In 2023, Aramco made its initial venture into the global liquefied natural gas market by acquiring a minority share in MidOcean Energy, recently expanding its stake to 49%. Aramco signed a nonbinding deal in June 2024 to purchase LNG from Sempra’s Port Arthur project in Texas, with the potential to acquire a 25% stake in Phase 2. Additionally, Aramco is negotiating with Tellurian to acquire a stake in its Driftwood LNG plant in Louisiana and reached a preliminary agreement with NextDecade Corporation for a 20-year LNG offtake from the Rio Grande export facility in Texas. Aramco’s potential LNG trading expansion comes at a time of growing demand, with Europe moving away from Russian gas and Asia transitioning from coal.

Decarbonizing Energy Production

Aramco has committed to reduce its operational emissions to net zero by 2050. At the sixth Future Investment Initiative in 2022, Aramco introduced what it said was “one of the world’s largest sustainability-focused venture capital funds” to drive lower-emission energy solutions. Aramco Ventures, the corporate venture arm of Aramco, is leading this effort.

Aramco Ventures’ investments focus on supporting the company’s decarbonization efforts, developing lower-carbon fuel businesses, and driving digital transformation. Through the Sustainability Fund, Aramco Ventures targets companies, such as Xpansiv, that are aligned with Aramco’s 2050 net-zero goal for Scope 1 and Scope 2 emissions (emissions related to a company’s operations) across its fully owned and operated assets. In January, Aramco announced it would inject an additional $4 billion into Aramco Ventures, bringing its total capital to $7 billion over the next four years.

Over the past two years, Aramco has signed several memorandums of understanding to explore potential lower-carbon energy solutions. In July 2023, Aramco entered into an agreement with Aker Carbon Capture, headquartered in Oslo, Norway, to explore collaboration on carbon capture, utilization, and storage as well as industrial modularization in Saudi Arabia. In May 2024, Aramco Ventures signed an agreement with U.S. climate tech company Spiritus to explore opportunities in direct air capture and revealed that Aramco Ventures had made an equity investment in November 2023. Aramco is one of several investors, including Amazon’s Climate Pledge Fund and Siemens Financial Services, to have together recently injected a total $80 million into the Los Angeles-based CarbonCapture, Inc. Aramco also entered into an agreement with Rondo Energy, which specializes in lower-carbon industrial heat and power.

Aramco has shown a commitment to continued growth in these areas. In January, the company revealed plans to inject $4 billion into its venture capital division, aiming to diversify Saudi Arabia’s economy away from oil. This funding will raise Aramco Ventures’ total capital to more than $7 billion, with venture capital fund Wa’ed Ventures receiving another $500 million to invest in local startups.

As Aramco ramps up gas production and carbon capture and storage initiatives, it also intends to focus on producing blue hydrogen and ammonia. In September 2020, Aramco, in collaboration with Japan’s Institute of Energy Economics and the Saudi Basic Industries Corporation, for the first time successfully produced a shipment of blue ammonia in Saudi Arabia and delivered it to Japan, with support from the Japanese Ministry of Economy, Trade and Industry. Aramco signed final agreements in July to acquire a 50% interest in Jubail-based Blue Hydrogen Industrial Gases Company, a division of Air Products Qudra, with provisions for purchasing hydrogen and nitrogen.

Strengthening Global Ties: Aramco’s Downstream Expansion

Aramco’s international reach has continued to expand, especially in downstream refining and petrochemical projects with the acquisition in 2020 of majority ownership of the Saudi Basic Industries Corporation and successful pursuit of new downstream opportunities.

The Aramco-SABIC merger has delivered key strategic benefits. By acquiring a 70% stake in SABIC, Aramco expanded its global petrochemical footprint to over 50 countries and strengthened its integration across the hydrocarbon value chain. This has strengthened Aramco’s position in the chemicals sector, diversifying its operations beyond crude oil and boosting resilience to market fluctuations. The merger has also leveraged SABIC’s expertise in innovation and materials, enhancing synergies in research and development.

Aramco is working to secure downstream deals in Asia, particularly bolstering its presence in China, as it aims to lock in long-term crude demand and tap into the growing petrochemicals market. After a September visit to Saudi Arabia by Chinese Premier Li Qiang, Aramco announced new agreements with key Chinese partners. The Development Framework Agreement with Rongsheng Petrochemical explores joint expansion of Saudi Aramco Jubail Refinery Company facilities and potential equity stakes in each other’s downstream projects, while the Strategic Cooperation Agreement with Hengli Group advances discussions on Aramco’s potential 10% stake in Hengli Petrochemical. In another downstream project in China, in May 2023, Aramco and its partners began construction of a refinery and petrochemical complex in Panjin, Liaoning province, where Aramco holds a 30% stake and the right to supply crude feedstock.

Investing in Innovation and Growth

Aramco is expanding beyond energy, embracing advanced technologies to optimize its operations and drive Saudi Arabia’s digital transformation, through its subsidiary, Aramco Ventures. Over the past couple of years, Aramco Ventures has shifted its focus; while earlier investments were centered around core oil and gas technologies, recent efforts have focused on fourth industrial revolution, digital, sustainability, and artificial intelligence technologies. The firm sees generative AI as a key tool in helping Aramco achieve its 2050 net-zero goal.

Saudi Arabia is rapidly emerging as the fastest-growing data center market in the Middle East, with its economy and public utilities quickly adopting new technologies to drive a sweeping digital transformation. According to Mordor Intelligence, the country’s “big data” and AI market is poised for significant growth.

The “KSA Cloud First Policy,” introduced in 2020, mandates that civilian government entities prioritize cloud solutions for any new information technology investments, propelling further expansion of cloud technology across the kingdom. This strategic shift marks a key milestone in Saudi Arabia’s journey toward becoming a global leader in AI and cloud computing.

Aramco Digital, the company’s tech subsidiary, plays a pivotal role in these initiatives, forming strategic partnerships to advance AI-driven innovation across Saudi Arabia. Aramco has signed multiple agreements to enhance the company’s supercomputing and AI capabilities. Aramco aims to use an AI supercomputer powered by advanced NVIDIA chips to optimize drilling and geological analysis. The company’s partnership with South Korean chipmaker Rebellions, Inc. is focused on exploring the use of AI neural processing unit chips in its data centers. Additionally, Aramco signed a memorandum of understanding with SambaNova Systems, an industry-leading South Korean firm that designs AI semiconductors, to drive digital innovation across the kingdom.

Aramco plans to deploy Cerebras CS-3 systems to enhance its cloud computing capabilities. Aramco Digital also launched the world’s first 5G processors in partnership with Qualcomm. According to Qualcomm, these chips are engineered to “transform 5G connectivity and coverage within a single processor.” Alongside the chip launch, the two companies are collaborating with Saudi Arabia’s Research, Development, and Innovation Authority to introduce the startup incubator program Design in Saudi Arabia. This initiative aims to support AI, wireless technology, and Internet of Things startups by offering technical assistance, business mentoring, and intellectual property training.

Aramco has established a partnership with Groq Inc., an AI startup specializing in inference technology, to construct a massive data center in Saudi Arabia. The center is projected to become a key hub for companies utilizing AI systems across the Middle East, Africa, and India. AI inference, which involves processing live data to make predictions or solve tasks, will be central to the data center’s operations. Aramco Digital has also teamed up with Accenture to propel generative AI advancements and strengthen the digital skillset of Saudi Arabia’s workforce.

These initiatives build upon the launch of the Saudi Accelerated Innovation Laboratory, a national hub designed to turn innovative ideas into market-ready products, alongside its Global AI Corridor ecosystem. The hub is expanding with two new centers in Riyadh to provide support for domestic technology innovation, in collaboration with the Saudi Authority for Research and Innovation Development and King Abdulaziz City for Science and Technology, among others.

Through these ventures, Aramco is not only modernizing its core business but also positioning itself as a leader in the global digital economy.

Challenges and Opportunities

While Aramco’s aggressive diversification strategy opens new doors, it also brings challenges. The company’s expansion into the LNG market exposes it to fluctuations in global gas prices and the complexities of managing international partnerships. Moreover, aligning the interests of various stakeholders in joint ventures is essential for ensuring the long-term success of these projects.

Saudi Aramco and other companies face challenges in scaling carbon capture, utilization, and storage. Additionally, the high costs associated with blue hydrogen production could make it difficult for Aramco to attract potential customers.

However, by harnessing its vast financial resources, expertise in energy production, and advanced technology, Aramco appears well positioned to navigate these challenges. Its evolving role as a national energy leader – encompassing oil, gas, petrochemicals, and digital technology – underscores its transformation from an oil producer into a diversified energy and investment powerhouse, central to Saudi Arabia’s future.

Aramco’s journey reflects not just the shift in Saudi energy policy but a broader reimagining of what national oil companies can achieve on the global stage. By broadening its portfolio and embracing innovation, Aramco is laying the groundwork for a sustainable and diversified future.

By: John Calabrese / Dec 3, 2024.

Enbridge Inc. raised its quarterly dividend for next year as it released its financial guidance for 2025.

The pipeline company says it will pay a quarterly dividend of 94.25 cents per share, up from 91.5 cents per share, effective March 1.

The increased payment to shareholders amounts to an annualized dividend of $3.77 per share to give it an annual yield of about 6.2 per cent based on the company’s share price Monday.

In its outlook, Enbridge says it expects adjusted earnings before interest, income taxes and depreciation between $19.4 billion and $20.0 billion for 2025, a nine per cent increase from the midpoint of its 2024 guidance.

Distributable cash flow per share is expected to be $5.50 to $5.90 next year.

The company says the guidance is based on expected strong utilization across its businesses and contributions from acquisitions and growth projects that entered service in 2024 as well as partial-year earnings from projects that are expected to begin service in 2025.

This report by The Canadian Press was first published Dec. 3, 2024.

By: CALGARY , Canadian Press / December 3, 2024.

The release of the October broad measure of consumer prices in the United States, the PCE deflator, showed inflation that was unsurprising and broadly stable. The numbers are distorted by fantasy housing price measures, but measuring prices that actually exist in the real economy are rising less than 2% y/y.

The price data is not especially alarming. However, a note of caution is struck in the detail. Currently, supply issues are more important than demand issues in driving inflation.

The San Francisco Federal Reserve breaks down price data into supply and demand driven price changes. Essentially, if prices and consumption both rise in an unexpected manner, demand is likely to be driving inflation. If prices rise, but consumption falls in an unexpected manner, supply constraints are likely to be driving inflation. Since June last year, supply constraints have been more important than strong demand in pushing up prices.

That today’s inflation is driven more by supply than demand is relevant as the US enters 2025. Several possible US policy measures have supply chain implications—notably the threatened tax on consumers of imports (including companies using imports in their supply chains), and large-scale deportations of workers. The extent of future supply chain disruption will assume greater importance for future inflation.

by: Paul Donovan / December 3 , 2024.

Gas withdrawals from EU underground storage tanks have accelerated as Europe suffers from the first cold snap of winter. Gas tanks were 85.5% full as of December 1, having peaked at 95.3% full on October 29, according to Gas Infrastructure Europe (GIE). (chart)

The current level of gas storage on December 1 is slightly down on the 94.8% and 92.3% full the tanks were on the same day in 2023 and 2022 respectively, but well ahead of the 68.2% full they were in 2021, a very cold winter.

Typically, the heating season officially kicks off on November 1, when EU rules say the tanks have to be at least 90% full. But uncertainty over the weather has already driven up gas prices by 45% since the start of this year, as the tanks are being emptied at a faster rate than in the previous two years.

Additional uncertainty has been added to the mix this year because Ukraine’s gas transit deal, which accounts for 15bn cubic metres of gas supplies to the EU from Russia, is due to expire on December 31 and Kyiv has promised not to renew it. Russia’s state-owned Gazprom has just released its investment plans for 2025 and those also assume the Ukraine transit deal will not be renewed.

The International Energy Agency (IEA) has already issued a warning that Europe could be facing a “new energy crisis” due to the end of the Ukrainian deal and the faster than normal drain on stored gas.

Higher energy costs will only exacerbate high cost-of-living conditions on consumers and make Europe’s looming recession worse, say economists. Europe is already facing a crisis after the report from former Italian Prime Minister and ex-European Central Bank boss Mario Draghi warned that Europe has lost its competitive edge. Germany is particularly vulnerable,  as its energy costs are already the highest in Europe.

Ukraine ready for a tough winter

Ukraine’s tanks are only 22.6% full and hold 6.5 bcm of gas, which authorities say is enough to get the country through the winter. Before the war Ukraine’s natural gas consumption varied depending on the weather and industrial activity, but in 2023 the country’s total annual gas consumption was approximately 18.7 bcm of which 8-10 bcm is needed for the heating season. A particularly cold winter can typically add demand for an additional 1.5 bcm.

But demand in Ukraine for gas has been greatly reduced after Russia destroyed half the country’s non-nuclear heating and power plants; the lack of generating capacity, not the lack of fuel, is the challenge for Ukraine this winter.

Ukraine’s storage facilities are the largest in Europe, with a total volume of more than 30 bcm, with 15 bcm still available for European partners. Last year foreign speculative traders stored some 3.2 bcm in Ukrainian tanks, but this year with the Russian attacks on Ukraine’s energy assets, the foreign traders have remained away.

By: bne IntelliNews / December 3, 2024

What’s going on here?

Asia’s crude oil imports increased slightly in November to 26.42 million barrels per day (bpd), but there are expectations for a decline in 2024 imports compared to this year.

What does this mean?

Asia’s demand for crude oil is undergoing a pivotal shift. China, the region’s largest importer, reached a three-month high in November with 11.62 million bpd. However, its import figures for the first ten months of 2024 show a significant decrease of 420,000 bpd from last year. In response, OPEC has adjusted its demand growth forecasts for the region downward, cutting China’s expected growth from 760,000 bpd to 450,000 bpd since July. Despite these reductions, the November report still predicts that Asia will see a demand increase of 1.04 million bpd in 2024. China’s 450,000 bpd and India’s 250,000 bpd are key contributors, though ongoing weak import volumes may delay OPEC+’s plan to ramp up oil output until after the first quarter of next year.

Why should I care?

For markets: Pacing through cautious waters.

The dip in Asia’s crude import volumes signals caution for OPEC+, likely prompting delays in increases in oil output. This careful approach reflects uncertain demand and could shape broader market strategies. Brent crude prices, having fallen from April highs to a September low, now hover around $72.83, highlighting a market more sensitive to geopolitical tensions than typical supply-demand changes.

The bigger picture: Quiet rumblings of change.

Global energy dynamics are shifting as Asia reassesses its oil import needs. OPEC’s revised forecasts reflect these major regional changes, potentially altering economics and energy geopolitics. As China and India modify their oil consumption, international trade patterns and strategic alliances might evolve, impacting everything from oil-dependent economies to the global shift toward green energy.

By: Finimize Newsroom, 28/11/2024.

Global automation and technology leader Emerson is joining the Linux Foundation’s Margo, a new open-standard initiative designed to make edge applications, devices and orchestration software work together seamlessly across multi-vendor industrial automation environments.

As process and discrete manufacturers implement enhanced digitalisation, they encounter challenges at the edge due to multi-vendor and multi-technology devices, apps and orchestration environments that do not easily integrate. The Margo initiative addresses these challenges through the creation of practical reference implementation, open standards and testing toolkits.

This approach will help remove obstacles and simplify the process of building, deploying, scaling and operating complex, multi-vendor industrial edge environments, helping manufacturers of all sizes build new and better digital operations or modernise existing ones.

‘The modern OT edge is the backbone of our next-generation automation architecture, enabling the availability of data and computing closest to where it is needed,’ comments Peter Zornio, Emerson’s chief technology officer. ‘Successful implementation will require open edge standards that will enable scalable, simplified and seamless interoperability among applications, edge devices and orchestration software – no matter the vendor technology. Emerson is pleased to join the Margo initiative to help create a unified and cohesive edge management ecosystem. Our collective progress will make it easier, faster and less costly for our customers to develop digital transformation programmes that realise the full potential of AI, machine learning and analytics at the edge.’

The Margo initiative complements Emerson’s Boundless Automation vision for a next generation, modern automation architecture designed to break down data silos and enable computing power where it is best suited, whether that is in the field, edge or cloud.

Drawing its name from the Latin word for edge, Margo is supported by some of the largest automation providers globally. Emerson joins Margo as a steering member along with industry peers to develop open and secure edge interoperability standards for industrial automation ecosystems.

The Margo project represents a significant industry collaboration to define mechanisms for interoperable orchestration of edge applications, workloads and devices. It will deliver the promise of interoperability through an open standard, reference implementation, and comprehensive compliance testing toolkit. More details on the project can be found at margo.org.

by…Anamika Talwaria , 28 November 2024.

When OPEC+ ministers meet this weekend, they confront the unpalatable choice: continue to curb oil-supplies well into 2025, or risk a renewed price slump.

With oil demand slowing in China and supplies swelling across the Americas, delegates say the group led by Saudi Arabia and Russia is once again discussing delaying their plans to increase production — potentially for several months.

But if OPEC+ wants to prevent a glut, it may need to do much more. A surplus looms next year even if the cartel cancels the supply hikes entirely, the International Energy Agency forecasts. Citigroup Inc. and JPMorgan Chase & Co. warn that prices are already set for a slump from $73 a barrel toward $60 — and lower if the group opens the taps.

Another selloff would spell financial pain for the Saudis, who have already been forced to cut spending on lavish economic transformation plans. And that’s before the oil market reckons with the return of President Donald Trump, who promises to bolster US crude production and threatens punitive tariffs for China.

“I think that there’s no room for them to increase and the market will remind them of that when necessary,” Gunvor Group Co-founder and Chief Executive Officer Torbjörn Törnqvist said at the Energy Intelligence Forum in London on Tuesday. 

Earlier that day, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman met with Russian Deputy Prime Minister Alexander Novak and Iraqi Prime Minister Mohammed Shia Al-Sudani in Baghdad. They discussed the importance of keeping markets balanced and fulfilling commitments to cut production, according to statements from the countries. The whole 23-nation coalition will convene online on Sunday. 

When the Organization of Petroleum Exporting Countries and its partners last gathered almost six months ago, the picture was very different. Confident that the post-pandemic surge in world oil consumption would continue, the group unveiled a road map to restore production halted since 2022, outlining the return of 2.2 million barrels a day in monthly installments from October. 

But things have shifted since then. 

Brent crude futures have slumped about 17% since early July — shrugging off conflict in the Middle East — while demand in China contracted for six months in a row as it grapples with an array of economic challenges. Chinese consumption — which has powered oil markets for the past two decades — may have already peaked, according to the IEA.

Next year, global oil demand will grow by roughly 1 million barrels a day next year — less than half the rate seen in 2023 — as the shift from fossil fuels to electric vehicles gathers pace, the Paris-based agency predicts. 

This will be eclipsed by a tide of new supply from the US, Brazil, Canada and Guyana, leaving an excess of more than 1 million barrels a day, it says.

“The oil market appears to be heading for a sizable surplus in 2025,” said Martijn Rats, an analyst at Morgan Stanley.

The fraught outlook for OPEC+ comes even before oil markets absorb the impact of a second term for Trump, who has promised the US oil industry will “drill, baby, drill,” and warned of brutal trade tariffs on a number of countries, including China. 

Iran and China

Still, forecasts can often go astray, and if oil markets defy bearish predictions it will make OPEC+’s task easier.

Global oil demand continues to surprise to the upside and looks set for strong growth in the next five to 10 years, BP Chief Executive Officer Murray Auchincloss said at a conference in London on Monday.

Oil prices are currently “trying to price in a future supply glut that has yet to arrive,” said Jeff Currie, chief strategy officer for energy pathways at Carlyle Group. The pullback in prices is already eroding the outlook for supply growth, reducing the probability the glut will materialize.

“Nearly all bear markets are demand-driven, and with China front-footed with stimulus, the odds of an unexpected demand shock are limited,” said Currie.

There’s also the possibility that Trump renews the campaign of “maximum pressure” used to choke crude exports from Iran during his first term, in a bid to limit the country’s nuclear program. 

“If Present Trump really goes whole hog, and they take down 1 million to 1.2 million barrels of Iranian oil exports, that would remove oversupply next year,” said Bob McNally, founder of Rapidan Energy Group and a former White House official. “That makes it much easier for OPEC+ to return those barrels.”

But absent a crackdown on Tehran, OPEC+ nations may need to persevere with their cuts. That would be a challenge for several members — notably Iraq, Russia, Kazakhstan and the United Arab Emirates, which have struggled to implement the supply curbs they were supposed to make at the start of this year.

The United Arab Emirates is being allowed to gradually phase in a further 300,000 barrels a day of extra output in recognition of recent increases to its production capacity. There’s no such allowance for Kazakhstan, where the start of a major expansion to the Tengiz oil field may further test its commitment to the OPEC+ deal next year. 

The longer the surplus persists, the greater the possibility that OPEC+ members will eventually tire of quotas and revert to pursuing individual market share, as they did during the policy “resets” of 2014 and 2020, said Natasha Kaneva, head of global commodities research at JPMorgan. 

“Increasing oil production might become a key consideration for some OPEC members in 2026,” when “there is an elevated risk of another market reset,” she said.

by Grant Smith,  Bloomberg / Wednesday, November 27, 2024

John Donigian, Senior Director of Market Strategy at Moody’s, discusses how energy companies can thrive in an increasingly unpredictable global market

Global complexities are presenting unprecedented challenges for energy and utility companies, creating a perfect storm of obstacles.

Regulations are evolving rapidly, environmental risks are escalating and supply chain vulnerabilities have never been more apparent.

Energy companies once again came under scrutiny for their role in the green transition during COP29. However, against this backdrop, supply chains for both renewable and fossil fuel sources are facing extraordinary pressure.

Moody’s, a global leader in credit ratings and integrated risk assessment, offers KYC and AML solutions to help firms identify threats from illicit actors while ensuring regulatory compliance.

When it comes to the energy sector, Moody’s risk assessments enable organisations to navigate complex regulations, manage environmental risks and make informed investment decisions that align with their operational and strategic objectives.

Leveraging comprehensive risk management capabilities, Moody’s enhances supply chain resilience across both traditional and renewable energy sectors.

Here, John Donigian, Senior Director of Market Strategy at Moody’s, discusses how modern energy companies can not only survive but thrive in an increasingly unpredictable global market.

What’s the current regulatory landscape for energy, oil and gas firms? How does it differ for those operating in renewables?

The regulatory landscape for energy, oil and gas firms has become increasingly stringent with the arrival of mandates on emissions, transparency and environmental standards. These sectors face complex compliance demands and heightened third-party risk, given the intricate nature of their supply chains that often function across regulatory jurisdictions.

A key example is the EU’s new Methane Regulation, which came into force in August 2024. The directive seeks to significantly reduce methane emissions from fossil energy production and applies to oil, gas and liquified natural gas (LNG) importers within the EU. It mandates operators establish firm monitoring and reporting procedures on methane emissions.

Firms operating within EU member states are obliged to fulfil these compliance responsibilities — if they fail to meet reporting requirements they face fines of up to 20% of their annual turnover.

Renewable energy firms are subject to a less intense regulatory environment, even potentially benefiting from tax incentives and streamlined permitting processes, such as with the EU’s Renewable Energy Directive. 

However, the sector is still subject to reporting requirements that focus on responsible sourcing and supply chain transparency, which aim to combat greenwashing.

For both sectors, integrated platforms that support compliance and comprehensive third-party risk management are becoming essential, enabling smoother regulatory adherence and mitigating supplier risk across global supply chains.

How can firms, particularly those operating in energy/utilities, best identify and measure risk in their supply chains?

Technological solutions are key to staying on top of supply chain risk. Energy companies can manage their compliance processes much more effectively with the help of advanced data tools, which help map out dependencies in the supply chain and model potential disruptions before they happen. 

Automated solutions also make it easier to create detailed risk profiles that are continuously updated with factors such as jurisdictional anomalies, shell companies and sanctions risk exposure.

Similarly, advanced analytics platforms, which centralise the data compliance professionals need to conduct risk assessments, provide a unified view of risk. 

This means companies can keep a close eye on suppliers and identify risks early on to act swiftly, ensuring they remain aligned with regulations, meet contract terms and build better resilience. 

How can these risks be avoided?

Energy and utility companies can avoid supply chain risks by diversifying their supplier base, maintaining strategic inventory buffers and investing in real-time monitoring to detect potential disruptions at early stages. 

Each step provides a barrier against supply-chain failures, from reducing reliance on any single entity and their associated risks, introducing safeguards against supply-chain interruptions and making supply chains more adaptable before disruptions can impact operations.

This proactive foundation enables companies to adapt swiftly and avoid costly operational setbacks.

Firms can also avoid supply chain risks by adopting a thorough approach to third-party risk management. 

De-risking begins with asking the right questions, particularly when onboarding new suppliers, such as who they are and who they’re doing business with, as well as understanding material risk factors like financial stability and business practices. 

Compliance teams should return to this practice regularly at each potential change in risk level, so should a supplier’s risk status change, they can act upon the information. 

Without consistent oversight, a singular incident of poor practice can impact an entire supply chain, potentially resulting in costly operational delays, regulatory breaches and financial penalties. 

How can firms prepare for less predictable risks like natural disasters?

The risks posed by catastrophic environmental events are increasing significantly in cost, frequency and severity.

A report on the impact of climate-related disasters in the US by the National Centers for Environmental Information revealed that in 2023 major weather and climate events in the US resulted in US$92.9bn in damages. 

The financial damage posed by these increasingly frequent natural disasters underscores the need for businesses to build resilience against such risks, particularly to protect their supply chains. 

Building resilience begins with using climate data and predictive analytics, which allows companies to pinpoint high-risk areas and adjust sourcing and logistics strategies. 

Firms may also consider relocating operations from vulnerable zones, establishing relationships with alternative suppliers and enhancing overall supply chain flexibility to improve adaptability in the face of evolving environmental risks.

By combining environmental data analysis with proactive supplier monitoring, organisations are better equipped to anticipate, adapt to and withstand emerging threats to their supply chains.

By: Tom Chapman /November 24, 2024

The merger could create the world’s second-largest oil producer after Saudi Arabian oil giant Aramco.

Russia is considering a merger of state-backed giant Rosneft Oil with Gazprom Neft, a subsidiary of majority state-owned Gazprom, and Lukoil, a private petroleum company, reported the Wall Street Journal.

Rosneft would absorb both Gazprom Neft and Lukoil in the proposed merger, indicated sources familiar with the negotiation.

This move would create the world’s second-largest crude oil producer, trailing only behind Saudi Arabia’s Aramco, and potentially pump approximately three-times the output of US oil giant Exxon.

The merger could also enable Russia to secure higher prices for Russian oil from key customers in India and China.

The Wall Street Journal reported that discussions between executives and government officials have been ongoing over the past few months, citing anonymous sources. However, the outcome remains uncertain, with a deal being possible but not guaranteed.

Despite the potential for such a significant consolidation, there are notable hurdles including resistance from certain executives at Rosneft and Lukoil, as well as the challenge of securing funds to compensate Lukoil shareholders.

Igor Sechin, the head of Rosneft and a close associate of Russian President Vladimir Putin, is a central figure in the ongoing discussions.

There is no clarity on whether Sechin will lead any potential merged entity, as representatives from the government, Gazprom Neft, Lukoil and Rosneft have denied involvement in merger talks.

The Kremlin has expressed no knowledge of such a deal, and last month it could not confirm reports of a proposal to nationalise the energy sector.

Gazprom has faced significant revenue losses since Russia’s large-scale invasion in 2022, largely due to reduced energy sales, reported the Institute for the Study of War, a US-based non-profit research group.

Additionally, long-time Gazprom CEO Alexey Miller failed to secure an agreement with China in early 2024 over the proposed Power of Siberia-2 gas pipeline due to unresolved disputes.

By: Offshore-technology / November 12, 2024