Markets

Royal Dutch Shell has reported a third quarter net income of $4.767 billion and a 15% slump in profits, citing lower sustained lower oil and gas prices and chemicals margins. The oil giant also launched the next $2.75 billion tranche of its share buyback program that totals $25 billion.

Sun-soaked Australia is seen as a future giant producer of hydrogen that could be exported to places like Germany for use in power generation and transport. The German industry is expected to import renewable hydrogen from Down Under in large quantities as early as 2025 to decarbonise their activities.

Tokyo Gas, Japan's largest natural gas utility, has posted a 9.4% rise in fiscal half-year net sales in the face of tough competition in the country’s liberalized energy market. The effects of a 1.7% drop in city-gas sales were compensated by a stark rise in Tokyo Gas’ customer base for electricity sales.

Siemens AG has today presented the new management team of Siemens Energy – a spin-off combining its conventional and renewable energy units. CEO-designate Michael Sen stressed he will focus on “pure-play energy business” and strive to get the spin-off listed as a separate entity by September 2020.

Sempra Energy affiliate IEnova anticipates to reap profits from the commercial start of a new Texas to Mexico gas pipeline. The company saw Q3 earnings slide despite the September start-up of the South Texas-Tuxpan interconnector which supplies gas to power stations in Tamaulipas and Veracruz.

Rail tankers will soon transport LNG to power generators across the United States, as the regulator seeks to advance the use of this cleaner-burning fuel in decentralized location like the Midwest. Trucks and ships are currently the only means of transport for liquefied natural gas.

Urbanization, rising income, and greater access to electricity in emerging economies will nearly double the electricity’s share of total energy use in buildings. In non-OECD countries, the U.S. Government projects that share will increase from 21% last year to reach 38% by 2050.

Petronet, the operator of India’s Dahei and Kochi LNG import terminals, has managed to push down the price for LNG cargoes from the US Gulf Coast. Tellurian, developer of the Driftwood liquefaction terminal, agreed to deliver cargoes to India at a price of $6 per unit – a much lower price than the price cap for output from India’s Malampaya gas field.

Shell Eastern Trading will likely be Hong Kong’s first supplier of US LNG for use in the 2.5 GW Black Point and 3.7 GW Lamma Island power stations. CAPCO and Hong Kong Electric already struck an LNG supply deal with Shell which covers up to 1.2 million tonnes per annum for 10 years, starting from 2020.

Russia’s Gazprom seeks to end a dispute with Naftogaz Ukrainy before a crucial gas transit contract expires on December 31, 2019. Offering an out-of-court settlement, Gazprom chairman Alexey Miller said he could picture a “zero option” whereby all court proceedings would cease and all lawsuits would be withdrawn.

Strike actions by workers at the French utility EDF in protest against the restructuring of the state-controlled company have curbed cumulative power output by 3.7 GW this morning. Production restrictions are expected to continue throughout the day.

Siemens AG, Europe’s largest engineering company, will create a new independent entity under the name ‘Siemens Energy’ that combines its conventional and renewable energy businesses. The spin-off will take effect as of April 2020 with a view to getting the new entity listed by September.

Flows of natural gas from the Appalachian Shale Basin to the rest of the U.S. surges as production reached over 16 billion cubic feet per day last month, pushing down prices in the Northeast. Meanwhile, demand rises in other states - both from the power sector and for liquefaction and export.

New offshore wind parks have pushed the share of renewables in the UK past that of fossil fuel power plants over the past three month – a first for the country. Wind farms, solar panels, biomass and hydropower produced a total of 29.5 terawatt hours (TWh) of electricity in Q3-2019 – slightly more than the 29.1 TWh generated from coal, gas and oil.

Rampant US gas supply has been outpacing demand growth for the past year, slashing prices in Europe and Asia. Some US exporters are considering shutting in production as record low gas prices at the Dutch TTF hub challenge the profitability of liquefying and shipping gas to Europe.

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News in Brief

ExxonMobil enhances turbine oils

Jan 17 – New high performance turbine oils, developed by ExxonMobil Lubricants, are  entering the market which are formulated to prevent build-up of lacquer, varnish and deposits. The oils are designed to protect against thermal and oxidative degradation, one of the root causes of deposit build-up.

Wärtsilä signs O&M deals in the Bahamas

Jan 16 – Following the commissioning of a Wärtsilä-built 132 MW power plant in Bahamas in December, the Finish manufacturer now signed a two-year operation and maintenance (O&M) accord with the plant owner, the Bahamas Power and Light Company (BPL). Wärtsilä will transition, train, and develop the owner’s Bahamian work force and provide key performance guarantees.

China, S'Korea curtail coal to tackle air pollution

Jan 15 – Beijing city government’s aggressive approach to tackling air pollution is working and South Korea’s spring coal-fired curtailments show some success in cutting seasonal emissions. According to Wood Mackenzie, this should benefit LNG, particularly while spot prices remain low.

Sri Lanka at brink of power shortages

Jan 14 – Sri Lanka could face power cuts by March, after plans for a large-scale coal power plant were been cancelled just prior to start of construction, and a tender for a 300 MW diesel plants ended up in court. On the demand side, pressure is building up as the region is moving into the dry season in February and March. Weather warnings say the island is likely to receive lower than average rainfall in the first quarter of 2020.

Caterpillar’s new genset comply with UK & German grid codes

Jan 13 – Caterpillar Inc. has launched a series of new generator sets that comply with the new G99 United Kingdom, VDE-AR-N 4110 German and Belgium C10/C11 grid codes. The following gensets – G3500H, CG132B, CG170, and CG260 (rated from 280-4,500kVA) – have been verified to be able to accommodate different reactive power modes, active power functions, and connection conditions for normal operation or reconnection after mains decoupling.

Transneft launches battery-based power supply for ILI tools

Jan 10 – Transneft Diascan, the largest Russian inspection service provider for pipelines, has developed and put into operation a power supply system for in-line inspection (ILI) tools based on rechargeable batteries. Flaw detectors performing inspections of trunk oil pipelines, gas pipelines and oil product pipelines can now use the energy from rechargeable batteries, which helps save time and reduces the cost of in-line inspection.

Pavilion starts trading LNG out of Madrid

Jan 9 – Singapore-based Pavilion Energy has completed the acquisition of all gas and LNG assets of the Spanish utility Iberdrola. From its new European headquarters in Madrid, Pavilion said has launched 2020 LNG trading operations with supplies focusing on Spain and the UK market.

Gazprom extends gas transits via Belarus until 2021

Jan 8 – Gazprom and Gazprom Transgaz Belarus have sealed additional agreements to extend the contracts for gas supplies to and gas transportation across Belarus until 2021. According to the newly-signed documents, the contractual supply and transit volumes in 2020 will remain at the level of 2019.

EastMed pipeline to take FID by 2022

Jan 7 – Greece, Cyprus and Israel have signed an agreement to build the 1,900-kilometre EastMed pipeline at an estimated cost of 6 billion Euros. The subsea pipeline, spanning over 1,900-kilometres would initially carry 10 Bcm of gas per annum from Israeli and Cypriot waters to Crete and then on to the Greek mainland and into the European gas network via Italy. A final investment decision (FID) is meant to be reached in 2022, given that the pipeline is scheduled for completion by 2025.

U.S. energy-related emissions drop over 2%

Jan 6 – Fewer emissions from coal consumption, combined with lower energy demand, have helped to significantly reduce the overall energy-related carbon emissions in the United States. According to government statistics, energy-related CO2 emissions fell 2.2 percent last year, and the downward trend is forecast to continue into 2020.

Brent crude prices surge

Jan 3 – North Sea Brent crude prices have risen to their highest level since September 2019, up nearly $3 per barrel because of Middle East tensions coupled with improved Chinese economic forecasts. Brent crude futures for March 2020 delivery were last seen trading at 69.21 per barrel the Intercontinental Exchange (ICE). This bullish price sentiment will feed through to oil-indexed natural gas contracts and LNG deliveries, linked to the Japanese crude cocktail (JCC) basket price.

IEA says coal’s fate tied to Asia

Dec 23 – Rapid rise of wind and solar power in many parts of the world has pushed coal-fired power generation into steep decline in most developed countries. "But this is not the end of coal, since demand continues to expand in Asia," analysts at the International Energy Agency commented: "The region’s share of global coal power generation has climbed from just over 20 percent in 1990 to almost 80 percent in 2019, meaning coal’s fate is increasingly tied to decisions made in Asian capitals."

Drop in coal-burn makes Germany edge closer to climate targets

Dec 20 – In 2019, Germany managed to increase its greenhouse gas emissions for the second year in a row, mainly due to a 20 percent drop of coal use for power generation and a growing contribution from renewables. Energy savings and efficiency increases also helped. According to calculations by energy research group AG Energiebilanzen (AGEB), Germany’s primary energy consumption declined by 2.3 percent this year, overall energy use fell more than 2 percent, and energy-related CO2 emissions fell by as much as 7 percent.

Glencore buys Orsted’s lgas business unit

Dec 19 – UK-listed mining company Glencore has agreed to take over a loss-making natural gas business from Orsted, including long-term import capacity at the Gate regas terminal in Rotterdam and five other LNG purchase agreements. “The transaction entails a payment from Orsted to Glencore and will result in a loss that exceeds our current provision related to the LNG activities,” stated Copenhagen-based Orsted without disclosing the value of the transaction.

Carbon-intensive firms may shed over 40% in value

Dec 18 – Energy- and carbon-emissions intensive companies could lose up to 43% of their value if national governments enact more stringent policies to reduce air pollution and tackle climate change. Companies using green energy, in contrast, could gain up to 33% in value, research by the United Nations-backed Principles for Responsible Investment (PRI) finds.

COP25 – a “lost opportunity”

Dec 17 – UN Secretary António Gutierrez has dismissed the outcome of the COP25 climate talks in Madrid as “disappointing” and “lost opportunity“. Some of the world’s largest emitters, including Australia, Brazil, China and Saudi Arabia had joined the U.S. in pushing for accounting loopholes to weaken commitments to reduce emissions in the transport and power generation sector.

Industry produces over 13% of Germany’s electricity

Dec 16 – Decentralized power generation at industrial sites keeps rising in Germany. According to the Federal Statistical Office (Destatis), industry produced 55 Terawatt-hours (TWh) of in 2018, meaning local units of mining and manufacturing generated 12.6 percent of the country's gross electricity output, mostly from gas-fired power units. The use of gas as a fuel for industrial power plants has consequently risen from around 35 percent to almost 50 percent over the last ten years.