The most noticeable theme to have come from COP26 so far has been the division between the Global North and the Global South and between energy producers and energy consumers. While some limited successes have been achieved, it is very doubtful that a major breakthrough will happen as the conference progresses.
- One of the main pre-event soundbites of the COP26 summit was the call to ban coal, urged on by the conference’s president Alok Sharma as well as G20 countries, yet coal still has a bright future in Asia.
- Asia’s largest coal consumers, China and India, have been resisting any stringent commitments from the summit as they see coal as a key part of their generation capacity.
- In Asia alone, there are some 200 coal-fired plants currently under construction, 90% of global greenfield coal capacity, with China topping the list with 95 plants and India coming second with 28 projects.
- As of today, of the more than 2,600 coal-powered plants operating globally, 71% are located in Asia.
- UK major BP (NYSE:BP) has added more than a billion dollars to its 2021-2022 buyback scheme on the back of stronger-than-anticipated Q3 results, with net earnings surging to $3.3 billion.
- China’s national oil company Sinopec (SHA:600028) discovered a huge shale oil field at its Shengli play, with in-place reserves of heavy viscous crude amounting to 3.4 billion barrels.
- Austria’s OMV (VIE:OMV), the largest oil and gas company in Central Europe, is considering splitting the company into separate energy and chemicals businesses in the upcoming years, mulling a potential buyback of Mubadala’s 25% share.
Tuesday, November 02, 2021
The start of the two-week COP26 summit in Glasgow has demonstrated how unlikely a comprehensive global deal is, highlighting divergences between the global south and north and between net energy producers and importers. These differences have been exacerbated by the abstention of leading political figures from China, Russia, and Turkey. Whilst COP26 will most probably achieve some moderate goals, such as in curbing methane emissions or limiting deforestation, the chances for an overarching breakthrough are limited. At the same time, Iran seems increasingly supportive of finding a diplomatic settlement to the JCPOA stalemate, which would put a cap on crude prices going much higher.
Methane Emissions in the Crosshairs of COP26. The first days of COP26 in Glasgow brought a rare glimpse of unity as more than 90 nations signed up to the Global Methane Pledge, committing to cut methane emissions by 30% from 2020 levels by 2030.
India Commits to a 2070 Net Zero Target. In one of the early-phase disappointments of COP26, India pledged to bring its carbon emissions to net-zero by 2070, claiming fossil fuels will be around for quite some time in the world’s largest democracy and it would drop GHG emissions by 33% compared to 2005 levels.
Halliburton May Take Over Exxon’s Stake in Iraqi Megafield. In a rare move for an oil services company, fracking giant Halliburton (NYSE:HAL) has expressed interest in taking over ExxonMobil’s 32% operator stake in Iraq’s giant West Qurna-1 field as the latter wants to quit Iraq altogether.
China Taps into Strategic Products Stocks. Constrained by an energy crunch that is increasingly taking its toll on China’s downstream production, Beijing stated that it would release state gasoline and diesel reserves from strategic stocks, the first time that has ever been done.
Australian Billionaire Eyes Argentinian Green Hydrogen Bonanza. Andrew Forrest, the owner of Australia’s mining giant Fortescue Metals (ASX:FMG), is planning to invest up to $8.4 billion into green hydrogen projects in Argentina, using wind energy to split water into hydrogen and oxygen.
Iraq Seeks Billion-Dollar Deals with Saudi Arabia. Cash-strapped Iraq is planning to sign several deals worth tens of billions of dollars with Saudi Arabia, including natural gas production deals in the western desert as well as several solar and desalination plants across the country.
US Carbon Capture Credit Well Received by Coal Burners. An important part of President Biden’s infrastructure bill, a proposed tax credit hike for carbon capture and sequestration projects (up to 85 per metric ton, from the current 50/mt) was received positively by utility firms using coal as it might provide a new revenue stream for the industry.
TotalEnergies Wants More Libyan Exposure. Whilst Libya’s stability is continuously on the brink of collapse, French major TotalEnergies (NYSE:TTE) is reportedly nearing the purchase of Hess Energy’s 8.2% stake in the Waha Oil consortium, a deal that will probably be announced in late November when Total’s CEO visits Tripoli.
European Gas Prices Surge on Gazprom Supply Halt. A major gas pipeline that brings Russian gas to Germany was switched to flow eastwards this Saturday, hindering EU-bound flows by Gazprom (MCX:GAZP) and sending day-ahead TTF prices above €70 per MWh again ($26 per mmBtu).
Bolsonaro Maintains Heat with Petrobras Privatization. Brazil’s President Jair Bolsonaro keeps on lambasting Petrobras (NYSE:PBR) for surging transportation fuel prices in the Latin American country, saying that he sees the company’s privatization as an ‘ideal move’ with crude prices this high.
EPA Dissuades Potential Limetree Refinery Buyers. The US Environmental Protection Agency warned potential bidders that the bankrupt 210,000 b/d Limetree Bay Refinery, scheduled to be auctioned this month, is at risk because of newly discovered groundwater contamination near the site.
Pakistan Panic Buying Strengthens LNG Upside. Pakistan issued an emergency tender for November-arrival LNG cargoes after its main suppliers Gunvor and ENI (BIT:ENI) canceled their deliveries amidst force majeure, creating a tangible upside risk for LNG prices in the upcoming days.
Turkey Hikes Gas Prices for Power Plants and Industry by Almost 50%. Keeping consumer gas prices unchanged, Turkey has raised the price of natural gas to power plants and industry by 47% and 48%, respectively, the largest state-supervised price hike so far in Europe.
By Tom Kool for Oilprice.com
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