Markets

A rebound in global oil and gas prices has helped Royal Dutch Shell’s quarterly profit to reach $5.6 billion, the highest level in four years – but still short of analysts’ expectations. "Good operational delivery produced one of our strongest-ever quarters with cash flow from operations of $14.7 billion," CEO Ben van Beurden commented.

Indian LNG buyers have been courting the incumbent seller Qatar to invest in stranded gas-fired power station as a precondition for new long-term offtake agreements. If Qatargas or Qatar Petroleum agrees to supply fuel to some stranded power plants, they are offered a profit share.

Switching from coal to cleaner-burning gas for power generation has led to a 28% decline in carbon dioxide emissions in the U.S. power sector. Slower growth of electricity demand also contributed to the decline, with the U.S. Energy Information Administration (EIA) calculating that power generation-related CO2 emission fell to a near 30-year low at 1,744 million metric tons (MMmt).

Wednesday, 31 October 2018 / Markets

GE to split its power business

Cash-strapped General Electric has curtailed its quarterly dividend and announced plans to split its Power business into two units. First, the unified Gas business will combining GE’s gas product and services groups, and a second unit will other assets including Steam, Grid Solutions, Nuclear, and Power Conversion.

Disruptions in gas supply and greater gas and electricity price volatility will have a critical negative impact on UK business in the next 10 years, a survey of the British Gas Security Group (GSG) finds. With 80% of Britain’s gas needs set to be imported in 2030, and in the face of the closure of Rough storage, the industry is vary about being overexposed to the volatility of international gas markets.

Seeking to balance a steady decline in domestic gas production, European buyers have been increasing their LNG imports for the third consecutive year to cater for growing demand from the power sector. Low hydroelectric output in Spain, Italy, and Portugal as well as unplanned nuclear plant shutdowns in France in 2017 led to greater gas use for power generation, and higher LNG import.

‘Producer economies’ in the Middle East need to look at a strategic calculation about where and how gas – often together with renewables – can bring the best value to the energy system. However, the International Energy Agency (IEA) says most Gulf States first need to adapt pricing policies to make it lucrative to produce gas as a commodity in its own right.

Growing use of electric vehicles (EV) in the UK could increase peak power demand by 3.5 GW by 2030 and 18 GW by 2050, up from currently around 60 GW. Under the 'Consumer Power Scenario', National Grid anticipates EV sales to account for more than 90% of all cars by 2050.

Since the Trump administration threatened fresh sanctions against Iran, the oil-rich country has substantially scaled down its production and exports of crude oil and natural gas. In May 2018, the White House said it would withdraw from the Joint Comprehensive Plan of Action (JCPOA) and reinstate sanctions against the regime in Teheran.

The International Energy Agency (IEA) has called on Saudi Arabia, Russia, Iraq, the UEA, Nigeria and Venezuela to step up efforts to diversify their economies to be able to cope with volatility of shale gas supply, and uncertainties over the pace of demand growth. In its Outlook for Producer Economies, the IEA assesses how the world’s six resource-dependent economies might fare to 2040 under a variety of price and policy scenarios.

Anticipating a speedy energy transition globally, the global classification society DVN GV says upstream players are adapting to this trend by shifting to faster, leaner and cleaner hydrocarbon production techniques. Oil and gas demand are forecast to peak in 2023 and 2034, respectively, prompting upstream players to favour a greater number of smaller reservoirs with shorter life-spans.

CAPEX for new-build offshore wind parks in Asia will soon be competitive with thermal power, with investors gearing up to participate in first-mover projects. According to Wood Mackenzie, “together with South Korea and Japan, East Asia needs around US$37 billion in investments to meet the mammoth growth in offshore wind capacity over the next five years.”

Wärtsilä today reported a lower than expected quarterly profit due to a slowdown in services while order-intake in its power plant business remained stable. “Net sales developed well in the third quarter, thanks to the strong growth in newbuild marine and energy deliveries. This, in combination with slower development in transactional service volumes, is affecting the group sales mix and burdening profitability,” said Wärtsilä CEO Jaakko Eskola.

Annual capacity factors for gas-fired power generators in the PJM Interconnection – the largest competitive wholesale electricity market in the United States – have increased in recent years, reflecting greater use of competitively priced shale gas in the region. The role of combined-cycle gas power plants (CCGTs), in particular, has shifted from load-following to frequently providing baseload power supply, instead of coal.

The pipeline rupture in early October at Enbridge’s BC gas interconnector still affects electricity markets and petroleum refining in the U.S. Pacific Northwest. Imports averaged 1.1 billion cubic feet per day (Bcf/d) in the first half of this year, but fell to zero after the rupture and the pipeline now operates only at 80% capacity.

Page 9 of 145