Energy This Week: Opec's complex deal, Aramco's share sale, & sparking more attention to electricity grids

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Opec charts complex path to ease cuts

The Opec+ alliance sprang something of a surprise with their complex deal that was announced on Sunday. Output cuts will be extended until the end of 2025 but additional voluntary cuts will gradually be phased out after September. The UAE’s production quota will be gradually increased over the first nine months of next year, a big win for the country, which has expanded production capacity more than any other Opec+ member in recent years. The process of assessing countries’ long-term production capacity as a reference for 2026 and beyond will now take until next November.

Brent crude was down $3.50 a barrel on Monday as the market digested the new arrangements. It recorded a second monthly loss overall in May, amid concerns about tepid Chinese demand and stubbornly high interest rates. The International Energy Agency downgraded its demand forecasts by 140,000 barrels per day, citing weak European demand, while expecting strong non-Opec output growth. Road fuel prices in the UAE are down this month in line with international moves, with both petrol and diesel about 6 per cent cheaper.

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Riyadh sells Aramco shares while Socar enters Abu Dhabi

The furious pace of US oil deal-making continues. ConocoPhillips has agreed to buy venerable Marathon Oil in an all-stock deal valued at $17 billion, plus the assumption of $5.4 billion of debt. Marathon has operations in the three major American shale oil areas: The Bakken Formation of North Dakota, the Eagle Ford in Texas and the Permian Basin in New Mexico. As most of the Permian Basin has now been consolidated, acquisitions are turning to the other shale plays.

Saudi Arabia plans to raise up to $12 billion from the sale of an additional 0.64 per cent of state oil company Aramco. The sale opened on June 2 and is expected to close by June 11. The country has been seeking to raise additional funds to narrow a budget deficit and fund its ambitious domestic development projects.

Azerbaijan’s national oil company Socar has been awarded a 3 per cent stake in Adnoc’s Sarb and Umm Lulu offshore concession in Abu Dhabi. The UAE is also co-operating on renewable energy projects in Azerbaijan. Adnoc Logistics and Services will buy shipping pool operator Navig8 for up to $1.49 billion in a two-step transaction. Navig8 has a fleet of 32 modern tankers.

The Ta’ziz industrial zone in Abu Dhabi's Ruwais has signed 31 land reservation agreements as part of the emirate’s manufacturing push. Ta’ziz, a joint venture between Adnoc and ADQ, is an industrial chemicals zone with agreements to make blue ammonia, methanol and other chemicals.

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Solving electricity 'grid lock' the hidden answer to soaring demand

Energy experts talk generation but industry professionals think about grids . For every dirham spent generating low-carbon electricity, 90 fils has to be spent on the grid. However, the world currently invests only 50 fils. Meanwhile, electricity consumption growth is set to accelerate with the use of more data centres and computationally intensive artificial intelligence. More investment in the electricity grid, steps to ease planning obstacles and the adoption of innovative technology are crucial to meet demand in a low-carbon manner.

Advances in AI must hasten “climate positive ” sustainable development, Cop28 president Dr Sultan Al Jaber told the Baku Energy Week forum in Azerbaijan, while the Tony Blair Institute says governments that install low-carbon power rapidly will have a competitive advantage in AI. Cryptocurrency backed by renewable assets can finance green energy projects without the negative environmental consequences of mainstream crypto-mining, says Peter Bahorecz, partner at the SunMoney Solar Group in Dubai. The rapid expansion of AI brings concerns about its soaring electricity use, greenhouse gas emissions and resource use – but it can also help solve environmental problems .

Gulf nations are considering nuclear power for its reliability and low-emission advantages, with the UAE reportedly thinking of building a second nuclear power plant. The International Atomic Energy Agency completed a mission on Kuwait’s nuclear safety framework last year but analysts see only the UAE and Saudi Arabia as likely to expand nuclear capacity for now in the GCC.

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Climate and energy policy engage or enrage British and EU voters

Climate has slipped down the agenda but remains an important issue in the UK general election on July 4, along with energy costs. Keir Starmer, leader of the opposition Labour Party, promises to “close the door” on Russian President Vladimir Putin with Great British Energy , a publicly owned clean energy company. Analysts say the $10 billion initial funding will only spur a sprint to net zero if the next government puts its full weight behind the plan.

A backlash against climate policies by right-wing policies is an expected trend in the European Parliament elections on Thursday. And US senator Joe Manchin, a rare Democrat from the coal-mining state of West Virginia, has left the party to become independent. He will not seek re-election in November.

President Sheikh Mohamed’s state visits to China and South Korea have yielded various investment accords, including agreement in the field of green development with Beijing, and a comprehensive economic partnership agreement with Seoul, which should boost renewable energy and possibly nuclear power.

Protesters in Istanbul have been arrested after holding a demonstration outside the Turkish headquarters of Socar. The group, 1000 Youth for Palestine, were demanding that the company stop shipping oil to Israel through a pipeline that runs to the Turkish port of Ceyhan.

A UK court has sentenced Abdul Jalil Mallah, a Syrian shipping magnate, to 18 months in prison after he was found to have lied in a case brought by a US company, which lent him money to buy two ships. Mr Mallah is accused by the US of sending oil from Iran to Hezbollah , and financing the Houthis in Yemen. Mr Mallah’s UK assets will be confiscated. However, he is now living in Syria.

After quadrupling the price of subsidised bread last Wednesday, Egypt’s Prime Minister has now hinted at raising the price of diesel , as part of attempts to narrow the country’s budget deficit.

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'Gates of hell have been opened' in Delhi’s heatwave

A fierce heatwave across south Asia has brought temperatures highs of nearly 50°C to Delhi. The heat has caused record-high electricity consumption in the Indian capital. The weather is driven by climate change, exacerbated by the loss of green cover and water bodies, and urban expansion. Conditions are intolerable and air conditioners, for those lucky enough to have them, are unable to keep up, writes The National’s India correspondent. Thirty-three polling station workers died of heatstroke in Uttar Pradesh on the last day of voting. The usual May storms did not arrive but the monsoon started early this month, bringing some relief.

The latest Environmental Protection Index, compiled by Yale and Columbia universities in the US, shows a continuing degradation of the planet’s life-support systems and a failure to tackle the climate crisis. The Middle East is doing poorly, although it has improved since last year. The UAE is ranked best in the region, followed by Oman, with positive news on their protected areas, wastewater reuse and control of fishing practices. Dubai is strengthening sea defences and building up its beaches at a cost of Dh355 million ($96.7 million).

A climate activist has been arrested for sticking an adhesive poster on Claude Monet’s painting Coquelicots in Paris’s Musee d’Orsay. This is the latest in a series of attacks on artwork intended to draw attention to environmental issues.

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Bonn climate talks must advance finance agenda

The first major climate talks since Cop28, under way in Bonn, Germany, for two weeks, have to make “serious progress ” in raising finance. The discussions are part of crucial preparations for Cop29 in Baku, Azerbaijan, in November. At the Bonn meeting, the Cop28 presidency set up an environmental task force to help farmers switch to more sustainable farming, particularly in climate-vulnerable and developing countries. However, Prof Jim Skea, the world’s most senior climate scientist, showed attendees four slides summarising what we know, and what we need to know , about climate change.

British financial companies are leaders in clean energy , having tripled their investment last year, outpacing global financial centres in the US, France, Germany and Japan.

The world’s oceans are “endangered ”, says France’s ambassador to the EU, and need to be protected as determinedly as the global climate. A one-day event at Sorbonne University Abu Dhabi on Thursday is intended to lead into the UN Ocean Summit next year, co-organised by Costa Rica and France and intended to be “the Cop28 of the oceans”.

The aviation industry’s climate future was a key topic at the International Air Transport Association meeting held in Dubai this week.

Dubai has received its first Tesla Cybertruck for hire, with The National taking it for a spin . And luxury electric vehicle maker Lucid has opened its first UAE retail spot , in Dubai’s City Walk. Lucid started assembling its vehicles in Saudi Arabia a year ago.