Energy This Week: UK Conservatives criticised on energy/climate, UAE boosts local manufacturing, & ADNOC enters Mozambique LNG
Return of Donald Trump main threat to Iran’s rebounding oil exports
Oil prices declined last week despite a rise on Friday, as persistent inflation makes it more likely that the US Federal Reserve will not cut interest rates soon. Having closed the previous week at $83.98 a barrel, Brent crude slipped to $81.36 on Thursday before closing the week at $82.12.
However, it has enjoyed a stronger start to this week, reaching $84.46 a barrel on Tuesday, with a weaker dollar and strong US air travel. The market widely expects that the next Opec+ meeting, to be held online on Sunday, will result in the group retaining its cuts for at least the next quarter.
Following the death of Iran’s president Ebrahim Raisi in a helicopter crash, analysts expect its oil policy to remain consistent. The country was the second-largest contributor to world oil production growth last year, after the US, and has announced plans to increase capacity to four million barrels per day from the current 3.6 million bpd. Actual production is between 3.2 million bpd and 3.3 million bpd. New sanctions imposed by the US last month probably will have little effect on Iran’s oil exports, but the possible return of Donald Trump to the White House next year would probably lead to much more aggressive actions against Tehran.
A Greek bulk cargo vessel was hit by three missiles in the Red Sea and has begun taking on water. However, the ship is continuing its voyage towards the UAE. Yemen’s Prime Minister Ahmed bin Mubarak denounced the Houthis’ attacks on shipping, and told the Arab Media Forum in Dubai that “the Houthi rebels have disrupted oil exports from Yemen since 2022, dealing a big blow to the economy”.
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Entry into Mozambique continues Adnoc’s LNG drive
After entering the US liquefied natural gas business for the first time two weeks ago, Adnoc has now bought into Mozambique . It took 10 per cent of the Area 4 block from Portuguese company Galp, entitling it to a stake in LNG production from Area 4, which could eventually reach 25 million tonnes per year. The Coral South floating LNG plant, with 3.5 million tonnes of annual capacity, is currently operational.
Adnoc raised $995 million from selling an additional 5.5 per cent of its drilling unit; the shares are listed on the Abu Dhabi Securities Exchange. Adnoc Drilling, which raised $1.1 billion from its IPO in October 2021, expects its activities to expand in support of its parent’s unconventional oil and gas developments. Increasing the free float is expected to help Adnoc Drilling enter the Morgan Stanley Capital International Emerging Market Index.
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‘Make it in the Emirates’ boosts local manufacturing of energy goods
The Make it in the Emirates forum in Abu Dhabi this week registered an additional $6.3 billion of funding committed to the UAE’s industrial sector. Adnoc will contribute Dh20 billion ($5.4 billion), boosting local manufacturing of vital equipment for its business. Suhail Al Mazrouei, Ministry of Energy, and the Emirates Water and Electricity Company also offered more competitive electricity prices for industrial users in Ras Al Khaimah, Fujairah, Ajman and Umm Al Quwain.
President Sheikh Mohamed is making state visits to South Korea and China this week, with access to advanced technology expected to be a vital topic of discussion. There is a “strong possibility” that the Korea Electric Power Corporation could be awarded the contract for a second nuclear power plant in the UAE.
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Conservatives criticised on climate record as UK election approaches
Climate and energy policy will be a crucial dividing issue between the ruling Conservatives and the opposition Labour and other parties in Britain’s general election on July 4. The Labour Party has laid out a proactive green agenda . Prime Minister Rishi Sunak was soaked with rain as he announced the election date, a symbol of unpreparedness for the changing climate. If the next prime minister is not to be a drip in Downing Street, they need to resolve the contradictions in the UK’s environment, energy and economic aims. The founder of climate consultancy Carbon Jacked, Jack Curtis, is one of 120 business leaders signing a letter saying they will support Labour. “We’re sick of the Conservative chaos and short-term thinking, particularly on net zero, which is the very worst of short-term politics,” Mr Curtis told The National.
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Hot weather brings Egyptian power cuts as Middle East’s air-conditioning burden grows
Egypt has begun suffering power cuts again, with unusually hot weather early in the summer. Despite a recent International Monetary Fund bailout, the country lacks funds to buy fuel and has run short of gas as domestic offshore output has slumped. Cairo has boosted taxes , including on water, electricity, gas and cooking fuel. A consortium led by AD Ports will develop a plant to produce green methanol from renewable energy in Egypt, as a low-carbon fuel for ships.
The Middle East’s reliance on air-conditioning will increase as the region heats up. Cooling accounts for 65 per cent to 70 per cent of electricity used in homes and brings a heavy burden of greenhouse gas emissions. More efficient air-conditioning units could make substantial savings , cutting energy use and bills by 40 per cent or more.
Concrete is an essential building material, with about half a tonne made annually for everyone in the world. However, the production of energy-intensive cement contributes about 7.5 per cent of greenhouse gas emissions. A new process discovered at the University of Cambridge could eliminate those emissions. It recycles old cement as an additive in steelmaking, while producing new cement.
The first rentable Tesla Cybertruck has arrived in Dubai . The stainless-steel electric vehicle has a range of 400km.
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Mangroves, snow and coasts shrink in face of global warming
Climate change advocates have been given awards by President Sheikh Mohamed to recognise their efforts to make Cop28 successful. They include Fatih Birol, executive director of the International Energy Agency, and former US climate envoy John Kerry. Fatumanava-o-Upolu III Dr Pa’olelei Luteru, Samoa’s UN ambassador and chair of the Alliance of Small Island States, was one of the winners. He said people from his home nation ask what is being done to protect them from climate-related damage.
The changing climate is affecting sports – and the sports business too needs to adapt. Cricket is hampered by drought and floods, skiing by vanishing snow, sailing clubs and golf courses by rising sea levels and tennis by wildfires. An American football player died of heatstroke in 2018.
The Gulf’s mangroves could shrink by 45 per cent this century on current trends, threatened by shoreline development and rising sea levels. The coastal forests are a crucial source of natural habitats and carbon sequestration. A new resort in the mangroves of Umm Al Quwain will feature solar power and wastewater recycling , with an intent to be minimally invasive to the environment.