Energy this week: Sudan, Iran tankers, oil & the dollar, MENA's water crisis and UAE Climate Tech

Sudan fighting threatens country’s energy supplies

Serious fighting in Sudan between the army and paramilitary forces endangers fuel and electricity supplies in the petroleum-exporting country, also the sole oil transit route for landlocked South Sudan. The Rapid Support Forces claim to have?captured?the Al Jaili Refinery and Garri power station, two of Sudan’s crucial plants.

On Thursday, the US Navy reported that the Islamic Revolutionary Guard Corps had?seized a Marshall Islands-flagged oil tanker?in the Gulf of Oman. Iranian TV released video footage of?commandos landing?on the vessel, saying it related to an “international dispute”, possibly referring to the earlier confiscation by the US of a ship carrying Iranian oil.

The Pars Special Economic Energy Zone, site of Iran’s main gas processing centre, said it would?sack 4,000 workers?who had gone on strike.

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Time for oil to dump the dollar?

Periodic suggestions that oil might be traded in a currency other than the dollar have intensified, driven by some recent news about transactions in Chinese yuan for Russian and Saudi oil and UAE liquefied natural gas (LNG). But is a wholesale?switch from the greenback?likely and would it matter?

Back in the real world, crude remains firmly denominated in dollars and US interest rates are a concern. Prices?dropped for a second week?in succession, despite a gain on Friday. Oil has now?given up all the gains?it made on last month’s surprise announcement of Opec+ supply cuts. The World Bank sees commodity prices?dropping at their fastest rate?since the start of the pandemic, by 21 per cent this year, with food down 8 per cent and energy prices falling 26 per cent. But ExxonMobil and Chevron remained bullish on short-term demand in their latest updates, and?oil services giant Halliburton?sees its customers still working to boost production.

Meanwhile, a?war of words?between Opec and the International Energy Agency was hotting up. Opec’s secretary general Haitham Al Ghais said the IEA should be “very careful” about undermining investments in oil and gas, after the agency’s executive director Fatih Birol criticised the exporter group’s decision to cut production last month.

French giant TotalEnergies has agreed on a three-year deal to?buy LNG?from Adnoc Gas, worth about $1 billion-$1.2 billion at current prices. TotalEnergies is likely keen to lock in supplies against medium-term shortages before new output arrives on the market from 2026.

UAE petrol prices will?rise about 5 per cent?this month, in line with higher world prices, while diesel drops as refining margins for the commercial fuel have tightened. This follows two months of price decreases.

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Saudi Arabia’s industrial push gains steel

Saudi Arabia has struck an agreement with China’s Baosteel to build the kingdom’s first steel plate manufacturing plant, in Ras Al Khair. The complex will use natural gas to cut emissions 60 per cent over traditional processes, and could?save up to 90 per cent?by converting to hydrogen.

BP, the latest major oil company to report results, saw first-quarter profits down on the same period last year, but still beat analyst expectations and improved on the fourth quarter. The British firm?earned $4.96 billion, helped by strong trading results.

AD Ports Group will?buy three crude oil tankers?as part of its joint venture with KazMorTransFlot, a subsidiary of Kazakhstan’s national oil company KazMunayGas, aiming to transport 8 million to 10 million tonnes of oil annually.

Petrochemical firm Borouge reported a?5.1 per cent year-on-year gain?in quarterly sales volumes and profits of $198 million.

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Climate Tech to speed up new technology in Abu Dhabi

The two-day event next week aims to?bring practical approaches?to reduce emissions from energy and the “hard-to-abate” sectors such as heavy industry and long-distance transport. Organised by the Ministry of Industry and Advanced Technology with the support of Adnoc, the conference should attract more than 1,000 leading figures from the worlds of climate, energy and technology, such as carbon capture company Carbon Clean, synthetic fuels maker LanzaTech and IT giant Amazon Web Services.

Quantum computing?could help solve climate change by simulating otherwise impossible technical problems such as chemical reactions in carbon capture and fertiliser production, traffic flow patterns and energy distribution.

Abu Dhabi utility Taqa announced it has invested $31.1 million in Xlinks First, a company planning to build the?world’s longest subsea high-voltage direct current line, to bring renewable electricity from Morocco to the UK. The Mohammed Bin Rashid Al Maktoum Solar Park now provides?more than 15 per cent?of Dubai’s electricity generation capacity, having reached 2,327 megawatts of its planned 5,000 MW by 2030.

UAE-based Monarch Airplane Manufacturing and Chinese drone firm EHang Holdings will set up a plant to?manufacture electric planes?in Abu Dhabi. In an alternate or complementary path to zero-emission flying, Dutch airline KLM is working with students from Delft University of Technology to?build a hydrogen-powered aircraft. Boeing has welcomed an EU plan to increase the share of sustainable aviation fuel at airports, saying it provides “planning certainty” to oil companies.

The International Energy Agency says electric car sales will?rise 35 per cent?this year, reaching 14 million vehicles, or 18 per cent of all cars sold. Dubai Police are one such buyer, having added their?first fully-electric luxury patrol car, an Audi RS e-tron GT. By 2030, battery vehicles could save 5 million barrels per day of oil consumption.

And S&P Global has identified?five key trends?to watch in low-carbon energy this year: sticky capital costs despite falls in component prices; an expansion of solar and battery manufacturing in Europe and the US as giant incentive plans weigh in; the entry of distributed renewables into new markets; a leading role for the US in carbon capture and hydrogen; and a nuclear comeback.

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Tackling the Middle East’s water crisis

Eleven of the 17 most water-stressed countries?in the world are in the Middle East and North Africa. Water scarcity related to climate change could cause?losses equal to 14 per cent?of the region’s GDP over the next 30 years.?Egypt is worried?about the Grand Ethiopian Renaissance Dam on the Blue Nile and is planning several new desalination plants. Iraq is?badly affected by desertification?and shrinking upstream flows of the Tigris and Euphrates rivers, so Iraqi farmers are turning to smart irrigation. Jordan intends to?build a desalination plant?near Aqaba and pipe water to its capital Amman using renewable energy. And Lebanese villages are turning to solar panels to power water pumps, as diesel has become unaffordable amid an economic crisis.

The recent restoration of diplomatic ties between Saudi Arabia and Iran could lead to?more co-operation?between the countries on climate change.

Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, and President-designate of Cop28, has criticised “bureaucratic red tape” facing developing nations seeking climate financing. The Higher Committee, responsible for preparing the climate summit, discussed its?global listening and engagement tour. And Sheikha Bodour bint Sultan Al Qassimi?warned the Sharjah Booksellers’ Conference?of the environmental impact of the book industry.

Meanwhile, a UK parliamentary committee said the country was?not on track?to hit its 2035 clean electricity target, and that it was unable to compete with US green energy subsidies. “Ministers think that publishing strategies and releasing social media videos will deliver the energy infrastructure the country needs,” said the committee’s chairman.