In the latest edition of the Numbers Report, we will take a look at some of the most interesting figures put out this week in the energy and metals sectors. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.
Let’s take a look.
Hitting Back at Production Mandates, Angola Quits OPEC
- Having been a member of OPEC for 16 years since January 2007, the African country of Angola surprised the oil community by saying it will quit the oil group following months of disputes over its production quota. - The most recent OPEC+ meeting on November 30 curbed Angola’s 2024 production quota by 350,000 b/d to 1.11 million b/d, as its output capacity was repeatedly assessed by OPEC secondary sources. - Angola’s production peaked at 1.9 million b/d back in 2010 and has been in structural decline ever since, negatively impacted by a slowdown in investment and a lack of oil discoveries (the Bavuca find in November 2022 was the first in nearly 20 years). - Angola became the fourth country to leave OPEC in the past ten years, after earlier departures of Indonesia, Qatar and Ecuador, with its current production of 1.13 million b/d expected to trend sideways despite having more freedom to produce.
Red Sea Attacks See Shipping Rates Rebounding
- Leading international shipping companies have placed a blanket ban on tanker transit through the Red Sea following repeated…
Numbers Report – December 15, 2023
In the latest edition of the Numbers Report, we will take a look at some of the most interesting figures put out this week in the energy and metals sectors. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.
Let’s take a look.
Hitting Back at Production Mandates, Angola Quits OPEC
- Having been a member of OPEC for 16 years since January 2007, the African country of Angola surprised the oil community by saying it will quit the oil group following months of disputes over its production quota. - The most recent OPEC+ meeting on November 30 curbed Angola’s 2024 production quota by 350,000 b/d to 1.11 million b/d, as its output capacity was repeatedly assessed by OPEC secondary sources. - Angola’s production peaked at 1.9 million b/d back in 2010 and has been in structural decline ever since, negatively impacted by a slowdown in investment and a lack of oil discoveries (the Bavuca find in November 2022 was the first in nearly 20 years). - Angola became the fourth country to leave OPEC in the past ten years, after earlier departures of Indonesia, Qatar and Ecuador, with its current production of 1.13 million b/d expected to trend sideways despite having more freedom to produce.
Red Sea Attacks See Shipping Rates Rebounding
- Leading international shipping companies have placed a blanket ban on tanker transit through the Red Sea following repeated drone and missile attacks from Houthi rebels in the Bab-el-Mandeb strait. - Suezmax freight rates from the Middle East to Europe have jumped by 25-30 worldscale points, with deliveries to the Mediterranean now costing as much as they did at the peak of the Suezmax squeeze in late October/early November. - According to a Kpler note, the Bab-el-Mandeb strait accounts for some 11% of global maritime flows with almost 5 million b/d of crude deliveries taking place via the Red Sea, mostly Middle Eastern exports to Europe and Russian exports to India. - For tankers that are still risking the Red Sea transit route, war risk insurance premiums have skyrocketed in recent days as insurance terms moved to 0.5-0.7% of hull value, compared to 0.1% three weeks ago.
Chinese Oil Drillers Spare No Upstream Investment
- China has managed to overturn a structural decline in its domestic oil production and record some impressive output growth in recent years, taking 2023 annual production to 4.18 million b/d. - As China’s legacy fields such as the Daqing play in Heilongjiang or the Bohai Bay fields operated by CNOOC face structural production declines, state-owned companies have been pouring cash into reversing those trends. - Almost two-third of production additions over the past 5 years have come from newly tapped smaller offshore fields, with the rest from tight plays in the Tarim Basin, capping the speed of future growth. - Analytical companies doubt that the 2% annual growth rate can be sustained and expect Chinese production to start declining after 2024, with 4.25-4.3 million b/d capping the output upside.
West Is Falling Behind on Renewables
- The Russia-Ukraine war and China’s increasingly tighter controls on exports of rare earth minerals have prompted Western countries to secure their supply chains, however their investments so far have been inadequate so far. - China’s clean energy supply chains for material mining, processing, refining and manufacturing of solar and battery cells grew from $10 billion in 2016 to $140 billion in 2023, according to Rystad Energy. - In the same timeframe, combined annual investment in all other nations has only grown from $7 billion in 2016 to $20 billion in 2023, even though a whopping $700 billion would be required to break China’s dominance. - Europe aims to source 25% of its mineral demand from recycling, however its current low base of having only 8 GW of solar PV capacity compared to 850 GW in China suggests they will mostly recycle Chinese-origin produce.
After 2023 Nuclear Phaseout, This Winter Faces Coal Reductions
- Germany made media headlines in April 2023 as it shut down its last three nuclear reactors, and this winter will push Berlin back into the headlines as some 10 GW of coal-powered generation capacity is set for closures. - Germany’s coal closures account for two-thirds of all coal plant decommissioning next year, with the UK closing its last operational plant in Ratcliffe, marking the end of the country’s 140-year history of coal. - There’s only marginal coal capacity expected to be shut in Germany between 2025 and 2029, before the second round of large-scale decommissioning by the end of this decade as Energy Minister Robert Habeck pushes for a full 2030 coal phaseout. - In contrast to Germany’s gas-powered generation that has been loss-making since August, clean dark spreads have been profitable all year round, albeit coal profitability dropped from €90 per MWh to a mere €10 per MWh currently.
Congo Elections Raise Stakes for Transition Metals
- The Democratic Republic of Congo is holding presidential elections that might have a lasting impact on energy transition metals, with voting so far disrupted by malfunctioning equipment and violence. - Should the incumbent President Felix Tshisekedi win re-election, a controversial plan to open up oil and gas exploration in the biodiverse Congo Basin would move ahead, whilst all opposition candidates oppose the initiative. - Any post-election disruption could have a huge impact on the cobalt industry, dominated by DRC that produces 70% of total global supply, an increasingly important element as the proliferation of EVs is set to double cobalt demand by 2030. - The DRC will also become the preferred country for investors into carbon sinks as the country’s rainforests capture some 822 million tonnes of greenhouse gases every year, though the Congolese authorities still need to create a regulatory framework for carbon offsets.
Northwest European Wind Generation Hits All-Time High
- As winter storms ravage the coasts of Northwest European countries, wind power generation reached all-time highs in both Germany and the United Kingdom this week, breaking a previous record from January. - Wind accounted for up to 70% of Germany’s total output on December 21, depressing the share of natural gas to a mere 5%, whilst in the UK the share of wind jumped up to 60-65% in the same day. - Amidst limited upside in solar generation, wind has become the engine of growth for Germany’s low-carbon generation as this year is set to become the first on record to see renewables surpass the 50% threshold of annual electricity output. - Having almost tripled into 2022 as the annual average electricity price in Germany hit €235 per MWh, this year to date the same metric dropped to €90/MWh, with day-ahead prices this week plunging to €20-25/MWh.
That’s it for this week’s Numbers Report. Thanks for reading, and we’ll see you next week.
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