Energy This Week

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Opec+ postpones output increase on falling prices

Slumping oil prices forced Opec+’s hand – the group decided on Thursday to pause its planned phase-out of production cuts by two months. While output is still intended to increase from December, Opec+ will have to assess the market before then. Iraq, Kazakhstan and Russia, which have been overproducing, should compensate according to an agreed schedule.

The oil market has been hit by several pieces of bad news: continued concerns about Chinese economic growth and a weaker US economy on lower-than-expected jobs data . Even the shutdown of much Libyan production, a more tangible event, has not helped. Brent crude closed below $70 per barrel on Tuesday for the first time since December 2021.

Markets took the Opec+ decision as a bearish sign, a lack of confidence in demand, even though proceeding to raise production would also have been bearish. Opec trimmed its demand estimate for the second month running, to 2 million bpd growth this year, down 80,000 bpd on last month’s figure. It identified a greater penetration of electric cars and natural gas-fuelled lorries in China as important factors. But its estimate for this year’s demand growth remains well above that of the International Energy Agency.

Iraqi oil poses a growing challenge to Opec+ plans

One of the headaches for Opec+ is Iraq. Its oil situation is complicated by a revival of production in the semi-autonomous Kurdistan region. And with a stronger portfolio of future oil and infrastructure projects, intended to deliver 6 million barrels per day by 2028, Iraq will continue its push for a higher Opec+ allocation.

The International Monetary Fund has encouraged Saudi Arabia to continue its structural reforms, helping diversify its economy away from oil. Non-oil growth is expected to reach 4.4 per cent in the medium term, while the oil economy continues to be held back by Opec+ production cuts. The fund also noted the need for additional efforts to meet the kingdom’s 2060 net-zero carbon target.

Oman is also continuing its diversification push. The latest step is to list 25 per cent of the shares of state-owned OQ Exploration and Production on the Muscat Stock Exchange in October. The company holds 14 oil and gas exploration and production licences in Oman and made a profit last year of 611 million Omani rials ($1.59 billion).

NMDC Energy's IPO has been oversubscribed more than 31 times, in the UAE’s biggest listing of the year. The offshore contractor is expected to raise about Dh3.22 billion ($877 million).

Adnoc advances in US hydrogen and Indian gas

Adnoc has acquired a 35 per cent stake in a blue hydrogen and ammonia facility to be built by ExxonMobil in Baytown, Texas. The plant is said to be the “world’s largest” of its type, with a capacity of 1 billion cubic feet of hydrogen a day and more than 1 million tonnes of ammonia annually. More than 98 per cent of the carbon dioxide produced will be captured and stored underground. Hydrogen is a key part of Adnoc’s and the UAE’s low-carbon energy plans.

During the official visit of Sheikh Khaled bin Mohamed, Crown Prince of Abu Dhabi, to India, Adnoc signed a preliminary agreement to provide 1 million tonnes a year of liquefied natural gas. This will mainly come from its under-construction Ruwais plant.

The Emirates Nuclear Energy Corporation also agreed to exchange knowledge with India’s Nuclear Power Corporation. The fourth and, for now, final reactor of the Barakah power plant started up on Thursday, with President Sheikh Mohamed praising it as a “significant step on the journey towards net zero”. The plant can provide up to a quarter of the UAE’s electricity.

The UAE is also strengthening its relationship with Angola, a key African oil producer, and an emerging site for renewable energy and the mining of critical minerals such as copper. The UAE is also the main market for Angolan diamonds.

Are renewables on track to triple?

At Cop28 last year, countries committed to triple renewable energy capacity by 2030. Though solar in particular is making strong progress, the sector faces several challenges and complexities: manufacturing overcapacity and falling costs for solar panels, supply chain constraints in wind, tariffs on Chinese products, and US politics. The National takes a deep dive into the topic.

There is a “gold mine of human and economic benefits” awaiting Africa if its politicians can deliver on the Cop28 promises, says Simon Stiell, the UN’s climate chief. But unabated global warming would bring an “economic sinkhole”.

A1RWATER will open an air-to-water bottling plant in Dubai Industrial City. The company, founded in Abu Dhabi in 2018, collects humidity from air to make drinkable water, supplied in reusable glass bottles.

Hottest summer on record brings problems for water and agriculture

This summer was the hottest on record , says the EU’s climate change monitoring service. The past decade is probably the hottest for 120,000 years. Weather forecasters warn of a “vicious cycle ” where intense heat and drought cause fires and air pollution, lowering crop yields. The fires and crop damage in turn release more carbon dioxide.

Iraq’s Lake Habbaniyah was once a popular leisure spot near Baghdad. But now much of the waters have dried up , as the country suffers drought, heatwaves and a drop in river flows from Turkey. On Friday, the UN General Assembly adopted a framework on the 2026 Water Conference, to be co-hosted by the UAE and Senegal, with the aim of accelerating action on sustainable water access in the face of climate change.

The UAE is pushing for agritech to cope with the hot, arid climate, improve its food security and reduce the carbon costs of food production and delivery.

Ancient samples of Middle Eastern wheat could help farmers cope with climate change. At least 60 per cent of the genetic diversity of historic wheat is absent in modern varieties, and this could include traits helpful against heat, drought and pests. The John Innes Centre in Norwich, eastern England, has a trove of thousands of landraces of wheat. In its collection are varieties from Iran, never grown in Europe, bearing a gene that gives resistance to fungus.

Oscar-winning director Asif Kapadia’s latest film, 2073, deals with a post-apocalyptic world. “We’re the grown-ups. Within our own industries, we should do something and speak up,” he said . Saving the planet must not be left to Generation Z, he added.