Solving Europe’s energy challenge

Solving Europe’s energy challenge

Summer 2022 is ending, and oil prices in the market continue in their well-known volatility. The barrel of oil, despite fears about its supply, is now at a price made worse by recession concerns that continue to cap any market forces.The global market, however, continues to fear Russia’s willingness to use energy as a weapon to put pressure on its adversaries. Especially since deliveries of Russian gas to Europe via the Nord Stream 1 pipeline are still suspended, fueling fears of shortages for the forthcoming winter.And if that is not enough, all of the above could be apprehended as not solving Europe’s energy challenge of going through this winter. Far from it, last week, the members of the Organization of the Petroleum Exporting Countries and their allies (OPEC+) decided to reduce their total production volume by 100,000 barrels per day. A symbolic reduction that “suggests that this gathering of producers is ready to defend the environment from high prices,” say analysts.  Here is a MEED’s view on the issue. 
With oil and gas prices surging, the countries of Europe face a looming winter energy crisis. Can the Middle East and North Africa help overcome the challenge?

Solving Europe’s energy challenge

 

Published in partnership with

One of the most apparent aspects of the Russia-Ukraine conflict is the rapid increase in energy prices brought on by Moscow’s reduction in exports to its European neighbours.

In 2021, Russia was the largest exporter of oil and gas to Europe, supplying some 40 per cent of its energy requirements, including 100 per cent of the total gas imports of five EU states, according to the International Energy Agency.

The continent’s three largest economies – Germany, Italy and France – depended on Russian gas for 46 per cent, 34 per cent and 18 per cent of their energy needs, respectively.

The imposition of sanctions on Russia in March 2022, followed by Moscow’s threat to suspend hydrocarbon exports, has resulted in a surge in energy prices.

Opec’s crude basket price increased from $78 a barrel at the start of the year to $122 in early June, while Henry Hub natural gas prices more than doubled from $3.8 a million British thermal units (BTUs) to $8.7 a million BTUs over the same period.

Expensive energy bills

This rapid energy inflation has been passed on to consumers through higher electricity bills.

In the UK, for instance, the energy regulator Ofgem estimates that the default tariff price cap will more than double from £1,300 ($1,529) in January to £3,580 in October, and reach a peak of £4,266 in the first three months of 2023, when demand will be highest during the colder winter months.

Replicated across the continent, this is likely to result in millions of households entering ‘fuel poverty’ as they struggle to pay their energy bills.

The Mena region is well-positioned to plug the shortfall in Russian gas exports as European governments scramble to source gas from new markets to reduce their dependence on Moscow

Reducing reliance on Russia

The subject was not surprisingly a central theme of debate at Siemens Energy’s Middle East & Africa Energy Week held in June, where attendees agreed on two main conclusions drawn from the crisis.

The first was that the Middle East and North Africa (Mena) is well-positioned to plug the shortfall in Russian gas exports as European governments scramble to source gas from new markets to reduce their dependence on Moscow.

The GCC alone globally exports almost exactly half of the 411 billion cubic metres of gas that Russia supplies to Europe annually. Most of this is in the form of long-term liquefied natural gas (LNG) contracts to east Asia, but there is some limited capacity available – primarily from Qatar – to fill part of the shortfall.

European nations have been quick to recognise this. For example, following a visit to the region by its Vice-Chancellor and Climate & Energy Minister Robert Habeck in March, Germany – Europe’s largest energy market – is now fast-tracking the construction of two LNG import terminals and has entered a long-term energy partnership with Qatar, the world’s largest LNG exporter.

Energy Week

The second principal finding from the Middle East & Africa Energy Week was that the conflict would act as an additional catalyst for renewable energy development as nations globally attempt to diversify their energy sources and reduce their dependence on imported fossil fuels.

This was in keeping with the results of a poll of up to 400 of the event’s participants. The survey, which forms the central component of the Siemens Energy’s Middle East & Africa Energy Transition Readiness Index, revealed that attendees considered the acceleration of renewables as the highest priority among 11 energy policies in their efforts to tackle the climate crisis, as well as the one with the greatest potential impact.

The Middle East is already taking a clear lead in this as it sets ambitious targets for clean, renewable capacity. For example, Saudi Arabia is looking to scale up its share of gas and renewable energy in its energy mix to 50 per cent by 2030.

Similarly, the UAE has set ambitious targets for 2050: to improve energy efficiency by 40 per cent, reduce emissions from the power sector by 70 per cent and increase the share of renewables in the energy mix to 44 per cent.

While Europe is looking for alternative gas supplies to urgently fill the gap in the short term, there is little doubt that in the longer term renewable energies and hydrogen will dominate the energy markets
Dietmar Siersdorfer, Siemens Energy

Hydrogen

In the long run, the energy crisis also provides momentum for the development of hydrogen production in the region, one of four other central themes emerging from the Energy Week.

Demand for hydrogen in Europe alone is forecast to double to 30 million tonnes a year (t/y) by 2030 and to 95 million t/y by 2050. Thanks to its geographical position, the Middle East is ideally located to meet this demand either by ship or pipeline.

Today, there are at least 46 known green hydrogen and ammonia projects across the Middle East and Africa, worth an estimated $92bn, almost all of which are export-orientated.

“While Europe is looking for alternative gas supplies to urgently fill the gap in the short term, there is little doubt that in the longer term renewable energies and hydrogen will dominate the energy markets. That the robust mix of the energy (gas and renewables) will make the energy system more resilient and support energy supply security while we, at the same time, move us at a fast pace into a renewable future,” says Dietmar Siersdorfer, Siemens Energy’s Managing Director for the Middle East and UAE.

Electricity to Europe

Another unintended consequence of the Ukraine crisis is to turn attention to direct electricity supply from the Mena region to Europe.

Although plans for exploiting the high solar irradiation levels and space provided by the Sahara desert through initiatives such as DESERTEC have long been mooted as an alternative solution, a combination of the crisis, lower costs and improving technologies are increasing impetus.

Some projects are already capitalising on the trend. For example, a joint venture of Octopus Energy and cable firm Xlinks recently received regulatory approval for a 3.6GW subsea interconnector between Morocco and the UK, using energy produced from vast solar arrays in the desert.

A similar project is the 2GW high-voltage EuroAfrica connector currently under construction linking Egypt with Greece via Crete. Plans are also under way for a third power connection between Morocco and Spain, which today is the only operational electricity link between Africa and Europe.

With the Egyptian-Saudi interconnector now under construction, and agreements recently reached for interconnectors between Saudi Arabia and Jordan and Kuwait and Iraq, the region is growing closer to supplying power to Europe directly.

“The development of regional grids has brought the prospect of direct current connection with Europe ever closer,” says Siemens Energy’s VP and Head of Grid Stabilisation in the Middle East, Elyes San-Haji. “Due to its plentiful solar resources, the Mena region could become an energy hub with a global network of high-voltage highways and super grids.”

Connection benefits

Interconnection makes sense on many levels. Not only would Europe benefit from a diversified, economical and renewable energy source, but its season of peak demand, winter, coincides with when supply is lowest in the Middle East, and vice-versa. Power transfer would not necessarily have to be in one direction only.

The Ukraine conflict and ensuing energy crisis have created an unprecedented opportunity for the Middle East and Africa to become more closely integrated with Europe. Whether in the form of fuel exports, either gas or potentially green hydrogen fuels, or direct electricity supply, the Arab world has never had a better chance to become the energy partner of choice for its European neighbours.

.

.

Fossil Fuel ‘Addiction’ Is Sabotaging Every Sustainable Development Goal

Fossil Fuel ‘Addiction’ Is Sabotaging Every Sustainable Development Goal

Oil exporters of the MENA amongst many others need to breathe with their two lungs: oil and gas, revenues of which account for each country’s earnings and cover all of their household and business needs.
Would a change to clean energy and/or a sharp and lasting drop in the price of hydrocarbons, outlets, or reserves be fatal or beneficial for these countries?
Hydrocarbon revenues apart from their addictive characteristics, play a considerable role and have not only shaped the respective economies but also the mentality of the related societies.  Common Dreams’ article on Fossil Fuel ‘Addiction’ Sabotaging Every Sustainable Development Goal is quite alarming.  Here it is.

Fossil Fuel ‘Addiction’ Is Sabotaging Every Sustainable Development Goal: Report

“Every day that we burn fossil fuels is one more day that we’re undermining these goals for a sustainable, livable planet,” said one campaigner.

A first-of-its-kind report published Wednesday warns that the continued extraction and burning of fossil fuels worldwide—particularly in the rich countries most responsible for planet-warming carbon emissions—is imperiling every single sustainable development goal adopted by United Nations member states in 2015.

The 17 SDGs are far-reaching, ranging from ending global poverty to eliminating hunger to combating the climate emergency, and achieving them by 2030 would require ambitious and coordinated action on a global scale.

But world leaders’ persistent commitment to fossil fuels, which the new report dubs an “addiction,” is rendering such action impossible by “amplifying the impacts of climate change and placing the health and stability of both natural and human systems at risk.”

“Fossil fuel addiction poisons every earnest attempt we make to tackle the sustainable development and climate agendas.”

“Fossil fuel addiction poisons every earnest attempt we make to tackle the sustainable development and climate agendas,” said Tzeporah Berman, chair of the Fossil Fuel Non-Proliferation Treaty Initiative. “Despite a robust pile of evidence that fossil fuels are core to our problems, governments are not moving and international cooperation is lacking.”

Authored by researchers at the University of Sussex on behalf of the Fossil Fuel Non-Proliferation Treaty Initiative and other civil society organizations, the report makes use of more than 400 academic articles and advocacy group reports to closely examine for the first time the threat that fossil fuels pose to each of the SDGs.

By 2030, the report notes, the climate crisis could push 122 million more people into extreme poverty worldwide by intensifying extreme weather events, which often cause mass destruction and displacement. Yet globally, “governments spend three times more money on fuel subsidies than the annual amount needed to eradicate poverty,” the researchers observe.

Fossil fuels are also undermining global efforts to combat hunger, which has spiked during the coronavirus pandemic.

“Increases in global temperatures, shifting rainfall patterns, extreme weather events, and elevated surface carbon dioxide concentrations from burning fossil fuels will reduce the yields of key crops,” the report states. “Fossil fuel production, and fossil fuel corporations’ carbon offset schemes, are pulling vast amounts of land away from productive uses, such as agriculture.”

And on down the list. Promoting good health and well-being, guaranteeing quality education for all, achieving gender equality, ensuring clean water and sanitation, transitioning to renewable energy, and securing lasting peace are all tasks that a fossil fuel-dependent status quo has made unachievable, the new report warns.

“By 2030, humanity needs to have halved global emissions, while at the same time achieving all 17 SDGs,” said report co-author Freddie Daley, a research associate at the University of Sussex. “This is an impossible endeavor without concerted global efforts to constrain and phase out fossil fuel production in a fast, fair, and equitable manner, with the wealthy nations that continue to benefit from fossil-fueled economic growth leading the way.”

“This research lays out the incompatibility of sustainable development and fossil fuels—and what is at stake if we fail to address unchecked fossil fuel expansion,” Daley added.

To dramatically change course and put the world on a path toward achieving sustainable development objectives, the report recommends an entirely new international framework, such as a Fossil Fuel Non-Proliferation Treaty with “binding commitments that constrain fossil fuel production globally.”

Such a treaty, the researchers suggest, should include three prongs:

  1. Non-proliferation. End new exploration and production by issuing a worldwide moratorium on the extraction of new fossil fuel reserves.
  2. Equitable Phase Down. Commit countries to phase down production in existing projects, in line with equity and the 1.5°C global temperature goal.
  3. Accelerate a Fair Transition. Provide finance and technological assistance to aid those most dependent on fossil fuel production to climate change to diversify their economies and move away from fossil fuels, scale up access to renewable energy and ensure a just transition for all.

“Every day that we burn fossil fuels is one more day that we’re undermining these goals for a sustainable, livable planet,” Jean Su, the director of the Center for Biological Diversity, said in a statement.

“The first step to fighting the extinction of countless species and the scourge of global poverty is to turn off the spigot of dangerous fossil fuels,” Su added. “That’s the only way we can build a just, peaceful future that protects the dignity of humanity and all life on Earth.”

 

Without Fossil Fuels There Is No Need For Electricity

Without Fossil Fuels There Is No Need For Electricity

Without Fossil Fuels There Is No Need For Electricity – OpEd

By Ronald Stein

America is in a fast pursuit toward achieving President Biden’s stated goal that “we are going to get rid of fossil fuels  to achieve the Green New Deal’s (GND) pursuit of wind turbines and solar panels to provide electricity to run the world, but WAIT, everything in our materialistic lives and economies cannot exist without crude oil, coal, and natural gas.

Everything that needs electricity, from lights, vehicles, iPhones, defibrillators, computers, telecommunications, etc., are all made with the oil derivatives manufactured from crude oil.

The need for electricity will decrease over time without crude oil.  With no new things to power, and the deterioration of current things made with oil derivatives over the next few decades and centuries, the existing items that need electricity will not have replacement parts and will ultimately become obsolete in the future and the need for electricity will diminish accordingly.

The Green New Deal proposal calls on the federal government to wean the United States from fossil fuels and focus on electricity from wind and solar, but why? What will there be to power in the future without fossil fuels?

Rather than list the more than 6,000 products made from the oil derivatives manufactured from crude oil, I will let the readers list what is NOT dependent on oil derivatives that will need electricity. They can begin listing them here ______   ________    _______.

And by the way, crude oil came before electricity. The electricity that came AFTER the discovery of oil, is comprised of components made with those same oil derivatives from crude oil. Thus, getting rid of crude oil, also eliminates our ability to make wind turbines, solar panels, as well as those vehicles intended to be powered by an EV battery.

Today, Environmental, Social and Governance (ESG) divesting in fossil fuels are all the rage with big banks, Wall Street firms, and financial institutions, to divest in all 3 fossil fuels of coal, natural gas, and crude oil.  Both President Biden and the United Nations support allowing banks and investment giants to collude to reshape economies and our energy infrastructure toward JUST electricity from wind and solar.

A reduction in the usage of coal, natural gas, and crude oil would lead us to life as it was without the crude oil infrastructure and those products manufactured from oil that did not exist before 1900, i.e., the decarbonized world that existed in the 1800’s and before when life was hard, and life expectancy was short.

Ridding the world of crude oil would result in less manufactured oil derivatives and lead to a reduction in each of the following:

  • The 50,000 heavy-weight and long-range merchant ships that are moving products throughout the world.
  • The 50,000 heavy-weight and long-range jets used by commercial airlines, private usage, and the military.
  • The number of wind turbines and solar panels as they are made with oil derivatives from crude oil.
  • The pesticides to control locusts and other pests.
  • The tires for the billions of vehicles.
  • The asphalt for the millions of miles of roadways.
  • The medications and medical equipment.
  • The vaccines.
  • The water filtration systems.
  • The sanitation systems.
  • The communications systems, including cell phones, computers, iPhones, and iPads.
  • The number of cruise ships that now move twenty-five million passengers around the world.
  • The space program.

Before we rid the world of all three fossil fuels of coal, natural gas, and crude oil, the greenies need to identify the replacement or clone for crude oil, to keep the world’s population of 8 billion fed and healthy, and economies running with the more than 6,000 products now made with manufactured derivatives from crude oil, along with the fuels manufactured from crude oil to move the heavy-weight and long-range needs of more than 50,000 jets and more than 50,000 merchant ships, and the military and space programs.

Open government policies should be focused on reducing our usage, via both conservation and improved efficiencies, to REDUCE not ELIMINATE crude oil, and reduce its footprint as much as practical and possible, is truly the only plan that will work.

Wind and solar may be able to generate electricity from breezes and sunshine, but they cannot manufacture anything.  Again, what is the need for the Green New Deal’s electricity from breezes and sunshine when you have nothing new to power in the future?

Ronald Stein, Founder and Ambassador for Energy & Infrastructure of PTS Advance, headquartered in Irvine, California.

 

Why is turning to Saudi Arabia for oil so controversial?

Why is turning to Saudi Arabia for oil so controversial?

The reasons are many but the British Prime Minister who according to the latest BBC piece of international broadcast, decided to visit some of the Gulf leaders to mainly talk about ending reliance on Russian oil and gas, will discuss energy security and other issues in Saudi Arabia and the United Arab Emirates today. But because critics have expressed concerns about the human rights records of these two countries, he pledged to also raise certain human rights issues although fostering some understanding between the Saudis and the West has always been left to the next day.

Let us here have a look at the supply of oil and gas issue that seems at this stage in contradiction with the latest world trend of distancing all advanced economies from fossil fuels.

Meanwhile, the EU leaders appear to be subtly trying to gain and eventually incorporate the aggressed nation within their ranks; it will certainly increase their “Food Power” vis a vis the rest of the world.


Why is turning to Saudi Arabia for oil so controversial?


UK Prime Minister Boris Johnson has defended a trip to Saudi Arabia, saying “the widest coalition” is needed to end reliance on Russian oil and gas.

But maintaining close ties with the Gulf kingdom is controversial among critics of its human rights record.

Why is Saudi Arabia so important for oil?

The US, UK and EU have announced that they will buy less Russian oil and gas, because of its invasion of Ukraine. However, prices have rocketed.

Saudi Arabia is the largest producer in the oil cartel Opec and has the spare capacity to help lower prices by increasing supplies.

Opec oil production

It means Western countries need its goodwill and to keep on friendly terms with its ruling family.

Read more on the BBC‘s article.

The above-featured image is for illustration and is of the BBC.

.

Energy investments in MENA will continue to grow

Energy investments in MENA will continue to grow

Energy investments in Middle East and North Africa (MENA) are forecast to grow in 2022 from $805 billion and continue in the next five years on the strength of higher oil and gas prices and planned unconventional gas and upstream investments.

Energy investments in MENA will continue to grow: Apicorp

Energy investments in MENA will continue to grow
Nicolas Thevenot

For petrochemicals, the drive for further integration and rationalisation will continue with reconfigurable petrochemical plants shifting to high-margin products such as plastic packaging films and healthcare and hygiene products, The Arab Petroleum Investments Corporation (Apicorp), a multilateral development financial institution, said in its annual Top Picks 2022 outlook on the key trends that are expected to shape the Mena energy markets landscape this year.

“The strong pipeline of investments we are seeing in the downstream projects reflects the region’s push to direct more funds to this sector, especially in brownfield petrochemicals projects versus greenfield ones. This makes sense in light of the current market conditions which favor improving cost and operating efficiencies in existing projects rather than sheer expansion,” said Nicolas Thevenot, Managing Director of Corporate Banking at Apicorp.

As for the energy markets, the report forecasts that they will remain comparatively stable during 2022 due to higher oil production by Opec+ and non-Opec countries and increased gas production and LNG supply. Brent is expected to average between $65/bbl. and $75/bbl. As for gas, the JKM and TTF/NBP hub prices in Asia and Europe are expected to cool down considerably from their all-time highs of 2021, especially after the winter season.

Meanwhile, the uptick in regional energy investments, which registered a modest $13 billion increase in Apicorp’s latest five-year outlook, will continue over the mid-term on the strength of higher oil and gas prices throughout 2022.

Among the trends the report examines is the impact of oil and gas prices on energy investments in the region and the main factors weighing down on broader economic recovery. 

“Despite the volatility in commodity prices which is expected to persist throughout 2022, the good news in the short-term is that oil and gas prices will likely remain elevated throughout the year, providing support for energy investments including renewable energy and ESG-related projects. Power sector investments in Mena are also expected to continue to thrive, with an accelerating shift towards renewables. Collectively, the region is expected to add nearly 20 GW of solar power over the next five years,” noted Dr Ahmed Ali Attiga, CEO of Apicorp.

The Mena region will take centre stage in the ongoing global energy transition as all eyes shift to Egypt, which will host COP27 in November — and UAE for COP28 in 2023. Yet while the transition continues to steadily gain momentum, the report notes that it may be marred by mixed policy signals from governments as they attempt to balance imperatives which are oftentimes very difficult to align: emissions reduction, energy affordability and energy security.

Thus, a sustainable and comprehensive policy is needed in order to avoid tilting the policy scale too far towards in favor of one of these factors, as this may lead to unintended consequences such as market distortions, heightened volatility, and energy shortfalls.

The already substantial pressure on policymakers is expected to be further exacerbated by continued volatility in commodity markets in 2022 due to the pandemic, uncertainty over macroeconomic policy, and supply chain disruptions. Despite the modest –-albeit uneven—recovery in 2021, it will take time for this improvement to migrate downstream and ease cost pressures this year.

The report’s analysis of energy investment trends suggests that the expected robust oil and gas prices in 2022 have triggered an opportunity to return to pre-pandemic activity. 

The uncertainty around Covid recovery will continue to influence how market dynamics will ultimately play out. Given the global vaccine inequity and a constantly evolving virus, governments are still grappling with the dilemma of public health versus economic recovery. 

In addition to global trade, supply chains and services, the current surge in cases globally will also adversely affect international travel and tourism. This will dent economic growth during 2022, which has already prompted a slight downward revision of the 2022 GDP growth forecasts in some regions and a likely asymmetric global recovery that is not necessarily sustainable for all countries.

Another uncertainty stems from the need for governments to introduce fiscal austerity measures to rein in spending and curb soaring inflation. Although markets ended 2021 with high returns (27% in the case of the S&P 500 index), high jobs growth and soaring commodity prices pushed inflation rates higher.

A fear of stagflation looms as public fiscal stimulus packages are withdrawn, asset purchasing programs are tapered and interest rates rise. While these measures will very likely cause economic recovery to slow down, the lagging unemployment rates are expected to remain relatively high amid a simmering inflationary cycle that may turn out not to be transitory after all. — TradeArabia News Service

The above-featured image is for illustration and is credit to Oil Price.

%d bloggers like this: