Oil & Energy

Date Issued – 5th March 2024

Courtesy of?Steve Alain Lawrence, Chief Investment Officer

Janis Urste, Chief Market Strategist

Bangladesh Initiates International Offshore Energy Exploration Bid

Bangladesh is poised to enhance its energy infrastructure by inviting international bids for 24 offshore exploration blocks in the Bay of Bengal on March 10, as announced by Petrobangla's chairman, Zanendra Nath Sarker. This move aims to mitigate the nation's severe energy shortages, exacerbated by economic pressures and high spot market energy prices. Additionally, Bangladesh has secured a long-term LNG supply deal with QatarEnergy starting in 2026, reflecting its strategic pivot from the volatility of spot markets. Amidst falling LNG spot prices, Bangladesh plans to increase its spot market LNG imports in 2024, demonstrating its commitment to diversifying energy sources and stabilizing its supply to support continued economic growth.

Spain Advocates for Unified EU Strategy on Russian LNG Imports

Spain is urging for stronger EU collaboration to regulate Russian LNG imports, emphasizing the need for unified action against the backdrop of increased European reliance on Russian energy following the conflict in Ukraine. Spanish Energy Minister Teresa Ribera highlighted the goal of preventing the redirection of banned imports to other EU states, aiming for a collective cessation of Russian gas by 2027. Despite no sanctions on LNG and natural gas, the EU faces challenges in maintaining a cohesive stance, as Spain's Russian LNG imports have notably doubled since 2022. The broader EU context reveals significant reliance on Russian LNG, with the EU being the largest buyer in January 2024, according to research. This situation calls for coordinated EU policies to ensure energy security while adhering to geopolitical and environmental commitments.

Turkish Terminal Ceases Russian Oil Imports

The Dortyol terminal in Turkey, operated by Global Terminal Services (GTS), will cease importing Russian oil to align with increased U.S. sanctions against Moscow's exports. Despite previous compliance with international sanctions and the G7 price cap, GTS is proactively distancing itself from Russian oil to avoid sanctions repercussions. This move reflects broader trends, as U.S. sanctions pressure has already diminished Turkish-Russian oil trade, leading to payment delays for imports. Turkey's role as a major importer of Russian oil is being reevaluated under the shadow of potential secondary sanctions from the U.S., affecting financial transactions and highlighting the international effort to restrict Russia's oil revenue.

Russia Explores Nuclear Energy Possibilities on the Moon

Russia and China are planning to install a nuclear power plant on the moon by 2033-2035, a venture aimed at supporting future lunar habitats, as revealed by the head of Russia's space agency, Roscosmos. This initiative reflects a shift towards nuclear energy to ensure the viability of long-term settlements on the lunar surface, complementing efforts to develop a nuclear-powered cargo spacecraft for efficient orbital transport. These ambitious projects are part of Russia's broader lunar exploration goals, which include preliminary missions to set the stage for possible crewed operations or a lunar base in collaboration with China. This development underscores Russia's commitment to reclaiming its space exploration legacy amid challenges and international discussions on space militarization.

$1.3 Billion Investment Fund Launched for Southern Africa's Energy Sector

Climate Fund Managers (CFM) is set to manage a $1.3-billion energy fund, the Regional Transmission Infrastructure Financing Facility (RTIFF), aimed at enhancing energy transmission and grid connectivity across Southern Africa. This initiative, supported by the Southern African Power Pool (SAPP) and the Southern African Development Community (SADC), starts with a $20 million commitment, targeting a first close of $500 million by 2025, and seeks to fully fundraise within 24 months.?

The fund, expected to attract both public and private investments, will address the critical need for improved infrastructure to exploit the region's abundant renewable resources, overcoming the current limitations of underdeveloped grids and insufficient cross-border transmission. By prioritizing projects that enhance connectivity, alleviate congestion, and foster inter-continental and renewable energy trading, RTIFF aims to significantly impact energy access and sustainability in Southern Africa.

Cenovus Energy Plans 19% Production Increase

Cenovus Energy plans to increase its production by 19% to 950,000 barrels of oil equivalent per day by 2028, leveraging the anticipated growth in pipeline capacity, including the Trans Mountain pipeline expansion. This expansion, expected to triple Canada's export capacity to 890,000 bpd, marks a significant stride towards enhancing market access for Canadian heavy oil, particularly to the United States and Asia. Despite a recent stock dip, Cenovus Energy is poised for growth, with operations in oil and natural gas production across Canada and the Asia Pacific, and refining and marketing activities in North America. This strategic move aims to capitalize on new global market opportunities, reflecting the company's commitment to strengthening its operational and financial outlook.

Indian Private Sector to Expand Coal Power by 10 GW

After a six-year hiatus in major private coal power developments, Indian energy giants like Adani Power, JSW Group, and Essar Power are gearing up to add at least 10 gigawatts of coal-fired capacity over the next decade. This resurgence aligns with India's Ministry of Power's objectives to meet the country's escalating electricity demand, which heavily relies on coal for 70% of its power generation. The move follows efforts to boost coal production and prioritize coal deliveries to power plants after a coal shortage in 2021 and 2022.

Furthermore, India aims to cease coal imports by 2025-2026, targeting a production increase to 100 million tons from underground mines by 2030. To address the growing power demand, India plans to expand its thermal power capacity by 88 GW by early 2032, focusing predominantly on coal-fired plants due to the prohibitive cost of natural gas. This expansion marks the most significant annual increase in India's coal power capacity in over six years.

Vitol Nears Acquisition of Major Stake in Italy's Premier LNG Terminal

A firm supported by Vitol, the world's largest independent oil trader, is on the verge of securing over a 90% interest in Adriatic LNG, Italy's key LNG import facility, currently owned by ExxonMobil and QatarEnergy. ExxonMobil, holding a 70.7% share through ExxonMobil Italiana Gas, alongside QatarEnergy's 22% and Snam's 7.3% stake, initiated the sale of its majority stake as part of its asset divestiture strategy.

Although initially targeted by multiple investors, including BlackRock, Vitol, through its partnership in energy storage company VTTI with IFM Investors and ADNOC, is now the front-runner in acquiring Exxon and QatarEnergy's shares. Snam, the terminal's minor shareholder, retains the option to augment its shareholding following the transaction's conclusion, under existing shareholder agreements. This potential acquisition underscores significant interest in enhancing energy infrastructure investments amidst evolving global energy dynamics.

[Disclaimer: This article provides financial insights & developments for informational purposes only. It does not constitute financial advice or recommendations for investment decisions.]

Explore investment opportunities with our dedicated relationship managers. Schedule a face-to-face and/or video meeting to help you achieve your financial goals. Visit our Website