Energy This Week: Israel-Gaza oil & gas dangers, Adipec, UAE's new wind, & a "moment of hope" for Cop28

Israel-Gaza violence raises oil supply concerns

The fighting has raised fears over oil supply, and prices jumped 4 per cent in early trading on Monday. The attacks by Hamas could lead the US to tighten enforcement of oil sanctions on Iran, one of the group’s backers. There is some risk of escalation into a wider conflict, yet prices dipped on Tuesday as traders concluded the chances of economic damage outweighed those of supply disruptions.

Israel ordered the shutdown of its Tamar gasfield as a precaution, a move which could dent Egypt’s liquefied natural gas (LNG) exports, as it draws some gas imports from Tamar.

The Finland-Estonia gas pipeline, under the Baltic Sea, has been damaged by an “outside act ”, say officials. The news drove European gas prices to soar almost 13 per cent, after a period when the continent had grown comfortable about its supplies despite the loss of the majority of Russian gas. The still-explained destruction of the Nord Stream pipelines, also under the Baltic, last September drew attention to the vulnerability of such links.

Turkish air and drone attacks in north-eastern Syria last week, aimed at damaging Kurdish militias, have hit complexes including oil wells and electricity infrastructure.

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Global oil market heading towards balance after sharp correction?

Despite a gain on Friday, oil prices closed down heavily on the week with Brent falling about 11 per cent, on liquidation of speculative positions. Sentiment soured because of concerns about rising bond yields, continuing high interest rates, and signs of demand destruction in the US, despite strong jobs figures. Opec+ agreed to stick to its existing output cuts last Wednesday, but this was widely expected. Banks UBS and Goldman Sachs think reductions could start to be unwound in November or at the start of next year if prices have risen. Kuwait’s Oil Minister said that the oil market was “moving on the right path towards balanced supply and demand”.

Opec’s latest World Oil Outlook says $14 trillion of petroleum investment is required by 2045 to meet energy demand, of which $11.1 trillion is in the upstream (oil and gas production) segment. It sees oil demand rising to 116 million barrels per day by that year, from 99.6 million bpd last year, with aviation and petrochemicals crucial areas for growth.

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Adnoc advances on LNG and Ghasha

The state oil company took an important step forward in its natural gas plans, as it announced a final investment decision on the $17 billion offshore Hail and Ghasha project, awarding two major engineering contracts. The fields will produce more than 1.5 billion cubic feet of gas per day, and capture 1.5 million tonnes of carbon dioxide annually. It also gave Baker Hughes the contract for more than $400 million to supply electric-drive compressors for its new liquefied natural gas plant in Ruwais.

Adnoc signed up to $2.7 billion of agreements for local manufacturing of crucial items in its supply chain, such as personal protective equipment, battery storage systems and uninterrupted power supplies. It will repurpose used electric vehicle batteries to power its drilling rigs, reducing emissions by a quarter and halving energy costs and its petrochemical joint venture Borouge has agreed to look at opportunities for recycling in Abu Dhabi with waste management firm Tadweer.

Its fuel retail arm, Adnoc Distribution, is searching for the “right investment opportunity ” to expand its business, after entering Saudi Arabia in 2018 and growing in Egypt earlier this year. Adnoc Logistics and Services has approved an interim $65 million dividend as second-quarter profits more than doubled, while Adnoc Drilling’s first-half dividend is up 5 per cent. Saudi Arabia has agreed with India to co-operate on the connection of their electricity grids, as well as on clean hydrogen, and a refinery in the state of Maharashtra.

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Adipec challenges the energy industry to deliver on climate promises

Takeaways from the conference included: more climate action from oil and gas companies; several major engineering and investment deals; two crucial carbon capture announcements; and persistent concerns about underinvestment in traditional energy.

Sheikh Khaled bin Mohamed, Crown Prince of Abu Dhabi, visited the event on the second day and looked into climate and decarbonisation technologies. Opec leaders at a climate event in Saudi Arabia said that “major hydrocarbon producers also have a responsibility to the world to provide the transition with enough hydrocarbon resources to make sure we are transitioning at a responsibly priced manner”, but the energy industry needs to do much more to deliver on its climate promises, including cutting methane and speeding up carbon capture.

The International Energy Agency sees global gas demand slowing in the years to come, because of a surge in renewables and improved energy efficiency.

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UAE unveils first major wind farms

Adipec also included several renewable energy announcements , notably the unveiling of the UAE’s wind power programme. The country is more associated with solar power, but Masdar has developed 103.5 megawatts of wind across four locations, including two islands, the far west of Abu Dhabi, and Fujairah. Although wind conditions in the UAE are not ideal, Masdar has used new turbines capable of generating at low speeds. Wind is a valuable complement to solar because of its ability to generate at night, and the company plans a second, larger phase. The clean energy investor also signed an initial agreement to invest $8 billion in up to 10 gigawatts of renewable energy in Malaysia, and its 10-year green bonds have been listed on the Abu Dhabi Securities Exchange.

The Rabdan electric sports car , made in Abu Dhabi, was the highlight of the Ministry of Industry and Advanced Technology’s stand at Adipec. NWTN, a Chinese-backed car maker, produces the vehicle in the Khalifa Economic Zone. Saudi Arabia has set up an electric vehicle (EV) charging company, with 5,000 fast chargers planned across the country by 2030, and its Public Investment Fund (PIF) has launched Tasaru Mobility Investments, aiming to accelerate its EV and autonomous driving sector.

Meanwhile, sector leader Tesla has continued price cuts in the US and China to keep up sales as the electric car market cools and competition heats up. Luxury car maker Lucid, backed by the PIF, loses $338,000 for each vehicle it makes, while rival electric lorry maker Rivian burns “only” $110,000, and its shares have performed much better.

Masdar will work with Boeing on sustainable aviation fuel after Emirates signed a deal with Shell for supply last week and Adnoc’s Ruwais refinery was certified to produce the cleaner fuel. Saudi Arabia Railways has started testing hydrogen trains as a low-emission option, and Hy24, a Paris-based hydrogen fund which raised $2.1 billion last year, is keen on investing in the Mena region because of its attractive natural resources, including potentially in local manufacturing.

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'Not on track' for climate goals, but a 'moment of hope'

The global stocktake at Cop28 should be seen as a “moment of hope ”, says Majid Al Suwaidi, director general of Cop28, on a panel at Mena Climate Week in Saudi Arabia. The executive director of UN Climate Change, Simon Stiell, at the same event, warned that “we are not on track”. Mena Climate Week , which began on Sunday, brings together politicians, activists and young people to address the climate challenge in the region, with sessions on issues such as mangroves, coral restoration, water security and smart agriculture in arid climates. At its opening, Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and Cop28 President-designate, pointed to the damaging impacts of climate change on the region, such as last month’s devastating floods in Derna, Libya. On the sidelines, Saudi Arabia unveiled a plan for accrediting and offsetting carbon emissions.

Pope Francis, in an update of his encyclical, has warned of the growing damage of climate change and expressed his hopes for a binding deal at Cop28. This is the first time that such a missive, to all Catholic bishops, has addressed environmental protection. The former governor of the Bank of England, Mark Carney, backed the Pontiff’s call, saying that businesses must step up the fight against climate change and that the speed of the clean energy transition had “gone up exponentially ”.

The European Space Agency’s director general has told The National that he wants to use Cop28 to expand co-operation with the UAE, in areas such as climate monitoring.

The private sector’s approach to sustainability has evolved , driven by rising climate change concerns and consumer demands. Dubai-based entrepreneur Rana Hajirasouli has launched Surpluss, a platform that saved 1,000 tonnes of waste from going to landfill in a year, and now wants to expand to the UK.

Saudi Arabia intends to establish a conservation area of more than 30,000 square kilometres in the Makkah, Asir and Jazan areas, as a crucial part of its Green Initiative, promulgated in 2021. Israel will back Africa’s Great Green Wall , to hold back desertification in the Sahel, with its contribution to the Green Climate Fund. This attracted overall $9.3 billion of new donations at a meeting in Bonn last week.

We as a society have to be aware of the very real constraints of land and water in many countries. After the warmest September on record, a new study finds that billions of people could be exposed to unbearable heat and humidity if the world warms from 1.5°C to 4°C. Drought-tolerant wheat could be one part of coping with a worsening climate.

Sultan Albadi, 11, from Sharjah, is an environmentalist who wants to educate other children about climate change.

Climate revolutionaries? Europe’s complex climate policy in the balance

Minister of Foreign Affairs Sheikh Abdullah bin Zayed met the British shadow foreign secretary, David Lammy of the opposition Labour Party, for talks which included co-operation on green energy and climate change. Shadow energy secretary Ed Miliband has declared that should Labour win the next election, it will double onshore wind, treble solar power and quadruple offshore wind generation, aiming to capitalise on the green vote after Conservative Prime Minister Rishi Sunak has steered in an anti-environmental direction.

British climate campaign group Just Stop Oil has made headlines by disrupting sporting events, but one backer, wind farm entrepreneur Dale Vince, has said he will stop funding them as their tactics have not worked quickly enough, and he would back the Labour Party in the next elections instead. Last Wednesday, Just Stop Oil protesters disrupted the French Revolution-themed musical Les Miserables in London’s West End and forced it to end early.

The European Parliament has approved Dutch politician Wopke Hoekstra as its new climate commissioner, and in his first public comments afterwards, he said that he aimed to “increase the level of ambition ” at Cop28. Previous climate summits have had plenty of ambition, but they also need practical plans for delivery, as well as a realistic assessment of why previous goals have not been met.