Energy This Week
Saudi Arabia could raise oil output – with eye on the long term
Saudi Arabia is ready to boost oil production from December, and to abandon an “unofficial $100 a barrel target ”, said a report in the Financial Times on Thursday. Whether or not the details are accurate, a change in Saudi and Opec strategy is key to maximising revenue over the long term.
Oil prices dropped last week, pushed down by the Saudi reports and a possible return of Libyan oil exports. Even the expansion of Israel’s conflicts to Lebanon, and a big Chinese economic stimulus package, which sent domestic stocks to their biggest gain in 16 years, did not turn the oil market around.
Iran missiles raise oil prices, but no supply disruption – yet
Oil prices gained 4 per cent in late trading on Tuesday ahead of Iran’s ballistic missile barrage against Israel. Brent closed at $74.23 per barrel, up from $71.77 on Monday. Nevertheless, Torbjorn Tornqvist, chief executive of trading giant Gunvor, told a conference in Fujairah, “I'm very confident that this will not have any impact at all on oil supply.”
Japanese bank MUFG still forecasts an average price of $84 in the fourth quarter, while Emirates NBD thinks Brent will average $73 per barrel next year. The fall in oil prices will see petrol and diesel prices in the UAE in October drop to their lowest since January 2022, with petrol grades down about 8 per cent.
Sanctions as a tool of international statecraft continue to gain pace , up 13 per cent year-on-year. Many of these target the oil sector, particularly in relation to Iran, Russia and Venezuela.
Adnoc’s biggest deal to date as it offers to buy Covestro
Adnoc has agreed to its largest deal to date, offering to buy German chemicals company Covestro for €14.7 billion ($16.27 billion). The offer includes a 54 per cent premium to the share price on June 19, 2023, the last day before rumours of its interest emerged. Adnoc will inject €1.17 billion in new capital into the company, expanding its position in high-tech speciality chemicals.
Adnoc Drilling has formed a joint venture, Turnwell Industries, with SLB (formerly Schlumberger) and drilling services company Patterson-UTI. The joint venture is intended to speed up the development of Abu Dhabi’s unconventional oil and gas resources. And Malaysia’s state oil company, Petronas, has been awarded a new oil and gas concession in the Al Dhafra region of Abu Dhabi. Onshore Block 2 is its third concession in the emirate.
Despite current lower oil prices, Oman’s credit rating has been raised by S&P to BBB from BB+, following a period of debt reduction and consolidation, asset sales, the introduction of value-added and corporate taxes, gradual reductions in energy subsidies, and economic diversification. But Saudi Arabia expects its budget deficit will widen on lower oil prices.
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UK first in and first out of coal power
The UK has become the first G7 country to phase out coal for electricity generation, after the Ratcliffe-on-Soar power station closed. The coal-powered steel blast furnace at Port Talbot in Wales, Britain’s single biggest source of greenhouse gas emissions, also shut down, and will be replaced by a much cleaner electric arc furnace. But the loss of nearly 3,000 jobs in a depressed part of the country, and the subsidies the new plant requires to be viable, highlight the difficulties Britain faces in balancing net zero, employment and energy security.
Renewable employment jumps while Oman promises zero-emission motoring
Renewable energy now employs more than 16.2 million people worldwide, finds the International Renewable Energy Agency’s latest report, up 18 per cent from a year earlier. 7.11 million, the largest share, are in solar photovoltaics. But Africa lags on renewable jobs, and skills training and attracting more women into the workforce are essential.
Oman plans to sell only zero-emission cars by 2050, a first for the region, and one which could catalyse the region’s electric vehicle sector. The UAE has agreed a $30 million partnership with Ghana to develop nature-based sustainable and climate solutions, particularly focused on the West African nation’s forests.
UAE to update climate plan again this year
The UAE will submit a new national climate plan before the Cop29 event in Azerbaijan in November, says Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, and Cop28 President. The “nationally determined contribution” update will cover all economic sectors and incorporate the latest technologies including artificial intelligence.
The UAE and US are finding solutions to key global challenges, including climate change, clean energy and water scarcity, writes the Minister of Foreign Affairs, Sheikh Abdullah bin Zayed, following the official visit of President Sheikh Mohamed bin Zayed to the White House last week. Science is key to facing the climate challenge, says Dr Amna Al Dahak, the UAE’s Minister of Climate Change and the Environment.
Global warming threatens Middle East agriculture
Climate change will bring more extreme rainfall to the Middle East, finds a new study. More than 130 people are now confirmed dead in the US due to Hurricane Helene, which has hit the country’s south-east with heavy flooding and landslides.
Agriculture in the UAE will be exposed to higher temperatures and new pests and diseases because of climate change. Genetic engineering and other techniques can help traditional crops such as date palms continue to flourish. The inaugural Gulfood Green conference, held in Dubai last week, highlighted eco-friendly farming, food packaging, waste management and other areas of sustainability, including lab-grown meat. One million bottles of water are bought globally every minute, but plastic bottles can contaminate water with microplastics, and are not environmentally friendly. Additionally, a UAE team has created Estidama Craft, a Minecraft server educational game about sustainability in the country.