Japanese utility Kansai Electric lost all its nuclear output in March, following a court injunction challenging the recent restart of its Takahama 3 and 4 reactors. On the other side of the Pacific Ocean, for the citizens of Brazil, rain proved a welcome distraction from the country’s political crisis, while in Syria an uneasy truce has broken out amongst the country’s warring factions.
In the ancient city of Rome, the executives of Italian oil and gas major Eni are pondering the wisdom of a multi-billion dollar investment decision in Mozambique, a decision they expect to take this year – but also one they had hoped to take last year. The thread that binds these seemingly disconnected events together, and which would change the regional East African economy forever, is LNG.
Japan is the world’s largest consumer of LNG and national demand for the commodity hit record highs in the aftermath of the devastating Fukushima nuclear disaster. That calamitous event saw all of the country’s substantial nuclear capacity come offline, raising oil, LNG and coal demand in a desperate attempt to generate enough electricity to keep the economy afloat.
Japan’s LNG imports jumped from 85.90 Bcm in 2009 to 120.6 Bcm in 2014, representing 36.2% of world LNG trade. The country’s coal demand rose from 108.8 million tons of oil equivalent to 128.6 mtoe in 2013, and the disaster briefly reversed a decade-long decline in Japanese oil demand.
However, Fukushima also sparked a boom in solar power, one of the few technologies that offers both a reduction in Japan’s dependency on imported energy commodities and lower greenhouse gas emissions, and, perhaps long-term, a deeper structural shift in the country’s primary energy supply. Japanese LNG demand is set to decline over the long-term, and, if the world’s largest LNG market is contracting, LNG suppliers need to look elsewhere for demand growth.
Rainfall in the Amazon
They could look to Latin America. Back across the Pacific, as the Takahama reactor turbines slowed, the residents of Sao Paulo, South America’s largest city, reached their arms into the air to welcome the rain. Brazil has been suffering a savage two-year drought, which has led to sometimes severe water rationing. Throughout 2015, Sao Paulo’s largest reservoir, Cantareira, was churning the muddy water below pump level.
Levels in Brazil’s vast hydroelectric reservoirs plummeted. Given the country’s dependence on hydropower, the only alternative was to ramp up LNG imports, a situation faced by all of the continent’s major economies. Between 2009 and 2014, South and Central America’s LNG imports leapt from 3.27 Bcm to 21.4 Bcm, an almost sevenfold increase, marking the emergence of a major new, but volatile, market for the commodity. However, how consistent this demand proves to be depends on the rain and Argentina’s ability to develop its own massive shale oil and gas reserves.
Sending coal to Newcastle
Perhaps more surprisingly, given its own natural gas endowment, the Middle East too has become a new market for LNG. Kuwait, Egypt, Israel and the United Arab Emirates all now import LNG. Conflict and political division have long obstructed the development of regional gas pipelines that would have made these LNG import facilities unnecessary. Peace in Syria, if it holds long term, could ultimately see the resumption of plans to pipe gas between the states of the Middle East and perhaps even further afield to Europe. But then again, peace may prove a double-edged sword for LNG; many of today’s LNG importers are potentially tomorrow’s exporters.
Surplus to requirements
The LNG industry has already entered a period of surplus and has a long list of projects under construction on which it is too late to turn back. This will bring ever-rising supply out to 2020. Yet what were once flourishing markets now look less certain, a reminder that expectations can change radically in less than a decade. The spot price of LNG is now close to a fifth of post-Fukushima levels.
As the Argentinean government moves to protect the development of its shale oil and gas reserves from low prices, perhaps the most salutary reminder of all is the US shale revolution. Seen less than a decade ago as huge new market for LNG imports, the US is on the cusp of becoming a major exporter.
Decision time in Rome
What then for the executives in Rome? Do they commit billions of dollars to their giant gas finds offshore East Africa, gambling that Japanese public opinion will turn against its nuclear industry, that rainfall in the Amazon basin will be low, that Argentina will fail in its quest for energy independence, and that the Middle East will never achieve meaningful inter-regional energy cooperation?
And what of renewables, which in Europe and the United States now hold the largest share of newly- installed generating capacity? The renewables boom continues to spread and its technologies to develop, boosted by the historic Paris Agreement on Climate Change agreed upon last December.
Yet coal use worldwide appears to be peaking and its fall may prove LNG’s opportunity. The short-term outlook appears fairly certain; LNG is in oversupply and will remain cheap for the next two to three years at least, but this itself may give it a more central role in countries’ energy plans. That is the gamble that companies hoping to develop new projects must consider. LNG is the cleanest of the fossil fuels, but a
fossil fuel nonetheless and an imported one to boot.
Ross McCracken, Managing editor, Energy Economist
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Anthony Rizzo Players Can't Sit On Bench According to a report from the Chicago Sun-Times, the world-famous Anthony Rizzo Phrase "Zombie Rizzo" has been told to never be used again. Of course, this is not the first time that the Zombified Chicago Cubs' first baseman has made headlines this year. A year ago, "Rosebud" was the catchphrase that he coined for himself. Also, there is Anthony Rizzo Shirts that come in his name. Now that the Cubs are World Series Champions, Anthony Rizzo is on his way to superstardom. He is leading the World Series in several categories, including hits, runs, home runs, RBI's, OBP, and SLG. Also, he's on track for a staggering year in hits, RBI's, and total bases, all while being second in home runs.
The Cubs Phenom
This season the Chicago Cubs are over 3.5 million in earnings from the local broadcasts alone. The Cubs could lose a good deal of local revenue if they fail to get back to the World Series. But the local revenue is not the biggest factor in the Cub's success. A large part of their success comes from two of their most popular players, third baseman Kris Bryant and first baseman Anthony Rizzo. These two players are now the favorites to win the MVP awards this year, especially if the Cubs are able to stay on top of the wild card standings. A Look at Rizzo Anthony Rizzo is often compared to his college teammate Andrew McCutchen. Both players have performed well at the plate.
The wood pellet mill, that goes by the name of a wood pellet machine, or wood pellet press, is popular in lots of countries around the world. With all the expansion of "biomass energy", there are now various production technologies utilized to convert biomass into useable electricity and heat. The wood pellet machines are one of the typical machines that complete this task.
Wood pellet mills turn raw materials such as sawdust, straw, or wood into highly efficient biomass fuel. Concurrently, the entire process of converting these materials in a more dense energy form facilitates storage, transport, and make use of on the remainder of any value chain. Later on, you will find plans for biomass fuel to replace traditional fuels. Moreover, wood pellet machines supply the chances to start many different types of businesses.
What Is A Wood Pellet Mill?
Wood pellet machines are kinds of pellet machines to process raw materials including peanut shells, sawdust, leaves, straw, wood, plus more. Today the pellet mills can be purchased in different types. Both the main types include the ring die pellet mills as well as the flat die pellet mills. Wood pellet mills are designed for processing many different types of raw materials irrespective of size. The pellet size is very simple to customize with the use of a hammer mill.
The Benefits Of A Wood Pellet Mill
- The gearboxes are made of high-quality cast iron materials which provide excellent shock absorption and low noise. The wood pellet mills adopt a gear drive that makes a better efficiency in comparison with worm drive or belt drive. The gear drive setup really helps to prevent belt slippage while extending the lifespan in the belt drive.
- The equipment shell includes reinforced ribs and increased casting thickness, which significantly enhances the overall strength of those mills, preventing the breakage in the shell.
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- The electric-control product is completely compliant with CE standard-os.
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How To Maintain A Wood Pellet Mill
- The belt tightness ought to be checked regularly. If it is now slack, it needs to be tightened immediately.
- The equipment should be situated in a nicely-ventilated area to ensure the temperature created by the motor can emit safely, to extend the lifespan of your machine.
- Before restarting the appliance, any remaining debris has to be cleared from the machine room to reduce starting resistance.
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- To ensure the cutter remains sharp, check this part regularly to prevent unnecessary damages for any other part.
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- The machine should take a seat on an excellent foundation. Regular maintenance of your machine will prolong the complete lifespan of the machinery.
It was shaping up to yet another dull OPEC+ meeting. Cut and dry. Copy and paste. Rubber-stamping yet another monthly increase in production quotas by 432,000 b/d. Month after month of resisting pressure from the largest economies in the world to accelerate supply easing had inured markets to expectations of swift action by OPEC and its wider brethren in OPEC+.
And then, just two days before the meeting, chatter began that suggested something big was brewing. Whispers that Russia could be suspended made the rounds, an about-face for a group that has steadfastly avoided reference to the war in Ukraine, calling it a matter of politics not markets. If Russia was indeed removed from the production quotas, that would allow other OPEC+ producers to fill in the gap in volumes constrained internationally due to sanctions.
That didn’t happen. In fact, OPEC+ Joint Technical Committee commented that suspension of Russia’s quota was not discussed at all and not on the table. Instead, the JTC reduced its global oil demand forecast for 2022 by 200,000 b/d, expecting global oil demand to grow by 3.4 mmb/d this year instead with the downside being volatility linked to ‘geopolitical situations and Covid developments.’ Ordinarily, that would be a sign for OPEC+ to hold to its usual supply easing schedule. After all, the group has been claiming that oil markets have ‘been in balance’ for much of the first five months of 2022. Instead, the group surprised traders by announcing an increase in its monthly oil supply hike for July and August, adding 648,000 b/d each month for a 50% rise from the previous baseline.
The increase will be divided proportionally across OPEC+, as has been since the landmark supply deal in spring 2020. Crucially this includes Russia, where the new quota will be a paper one, since Western sanctions means that any additional Russian crude is unlikely to make it to the market. And that too goes for other members that haven’t even met their previous lower quotas, including Iraq, Angola and Nigeria. The oil ministers know this and the market knows this. Which is why the surprise announcement didn’t budge crude prices by very much at all.
In fact, there are only two countries within OPEC+ that have enough spare capacity to be ramped up quickly. The United Arab Emirates, which was responsible for recent turmoil within the group by arguing for higher quotas should be happy. But it will be a measure of backtracking for the only other country in that position, Saudi Arabia. After publicly stating that it had ‘done all it can for the oil market’ and blaming a lack of refining capacity for high fuel prices, the Kingdom’s change of heart seems to be linked to some external pressure. But it could seemingly resist no more. But that spotlight on the UAE and Saudi Arabia will allow both to wrench some market share, as both countries have been long preparing to increase their production. Abu Dhabi recently made three sizable onshore oil discoveries at Bu Hasa, Onshore Block 3 and the Al Dhafra Petroleum Concession, that adds some 650 million barrels to its reserves, which would help lift the ceiling for oil production from 4 to 5 mmb/d by 2030. Meanwhile, Saudi Aramco is expected to contract over 30 offshore rigs in 2022 alone, targeting the Marjan and Zuluf fields to increase production from 12 to 13 mmb/d by 2027.
The UAE wants to ramp up, certainly. But does Saudi Arabia too? As the dominant power of OPEC, what Saudi Arabia wants it usually gets. The signals all along were that the Kingdom wanted to remain prudent. It is not that it cannot, there is about a million barrels per day of extra production capacity that Saudi Arabia can open up immediately but that it does not want to. Bringing those extra volume on means that spare capacity drops down to critical levels, eliminating options if extra crises emerge. One is already starting up again in Libya, where internal political discord for years has led to an on-off, stop-start rhythm in Libyan crude. If Saudi Arabia uses up all its spare capacity, oil prices could jump even higher if new emergencies emerge with no avenue to tackle them. That the Saudis have given in (slightly) must mean that political pressure is heating up. That the announcement was made at the OPEC+ meeting and not a summit between US and Saudi leaders must mean that a façade of independence must be maintained around the crucial decisions to raise supply quotas.
But that increase is not going to be enough, especially with Russia’s absence. Markets largely shrugged off the announcement, keeping Brent crude at US$120/b levels. Consumption is booming, as the world rushes to enjoy its first summer with a high degree of freedom since Covid-19 hit. Which is why global leaders are looking at other ways to tackle high energy prices and mitigate soaring inflation. In Germany, low-priced monthly public transport are intended to wean drivers off cars. In the UK, a windfall tax on energy companies should yield US$6 billion to be used for insulating consumers. And in the US, Joe Biden has been busy.
With the Permian Basin focusing on fiscal prudence instead of wanton drilling, US shale output has not responded to lucrative oil prices that way it used to. American rig counts are only inching up, with some shale basins even losing rigs. So the White House is trying more creative ways. Though the suggestion of an ‘oil consumer cartel’ as an analogue to OPEC by Italian Prime Minister Mario Draghi is likely dead on arrival, the US is looking to unlock supply and tame fuel prices through other ways. Regular releases from the US Strategic Petroleum Reserve has so far done little to bring prices down, but easing sanctions on Venezuelan crude that could be exported to the US and Europe, as well as working with the refining industry to restart recently idled refineries could. Inflation levels above 8% and gasoline prices at all-time highs could lead to a bloody outcome in this year’s midterm elections, and Joe Biden knows that.
But oil (and natural gas) supply/demand dynamics cannot truly start returning to normal as long as the war in Ukraine rages on. And the far-ranging sanctions impacting Russian energy exports will take even longer to be lifted depending on how the war goes. Yes, some Russian crude is making it to the market. China, for example, has been quietly refilling its petroleum reserves with Russian crude (at a discount, of course). India continues to buy from Moscow, as are smaller nations like Sri Lanka where an economic crisis limits options. Selling the crude is one thing, transporting it is another. With most international insurers blacklisting Russian shippers, Russian oil producers can still turn to local insurance and tankers from the once-derided state tanker firm Sovcomflot PJSC to deliver crude to the few customers they still have.
A 50% hike in OPEC’s monthly supply easing targets might seem like a lot. But it isn’t enough. Especially since actual production will fall short of that quota. The entire OPEC system, and the illusion of control it provides has broken down. Russian oil is still trickling out to global buyers but even if it returned in full, there is still not enough refining capacity to absorb those volumes. Doctors speak of long Covid symptoms in patients, and the world energy complex is experiencing long Covid, now with a touch with geopolitical germs as well. It’ll take a long time to recover, so brace yourselves.
End of Article