The French government will decrease the costs of connection for small and medium-sized renewable energy facilities and biogas production installations onto the power grids and gas distribution networks by up to 40% and expects to spend about €30m/year to support the national rollout of these installations. So far, only consumers and grid operators benefited from a grid connection discount. The rationale behind the decision is to allow a more balanced renewable energy deployment in the territory and particularly in rural areas located far from the power distribution networks.
Besides, this measure is meant to support the nationwide production of methane (biogas) from animal manures and plant products. Until now, the cost of connection for biogas plants to the natural gas distribution networks were entirely borne by the producers, which could make it impossible for the implementation, biogas projects in rural areas where the methane gas was located too far from the gas network. With the new provision, only 60% of the cost of connecting a biogas plant to the gas grid will be covered by the power producer.
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Many of Indonesia’s oil and gas fields, both on and offshore, are coming to the end of their commercially viable operational lifespan. More than 60% of Indonesia’s oil and more than 30% of gas production comes from late-life-cycle resources spread across the world's largest island country. Despite investment and use of enhanced oil field recovery measures, as well as increasing automation to extend the economic lifespan of these assets, decommissioning will soon become necessary.
However Indonesia, like many countries new to the prospect of decommissioning energy infrastructure, face many key technological, fiscal, environmental, regulatory and industrial capacity issues, which need to be addressed by both government and industry decision makers.
This report, commissioned by the consulting and advisory arm of London and Aberdeen based Precision Media & Communications, aims to take a look at many of the issues Indonesia and other South East Asian oil producing nations are likely to face with the prospect of decommissioning the region's oil and gas aging energy infrastructure both onshore and offshore... To find out more Click here
The signs going into OPEC’s bi-annual meeting in Vienna were broadly positive. On one hand, you had some key members – including Iraq, surprisingly – stating the need for the broader OPEC+ club to make further cuts to its supply deal. On the other hand, there was Saudi Arabia, which needed a win to support Saudi Aramco’s upcoming IPO. What emerged was a little something for everyone, that was still broadly positive but scant on the details.
The headlines spinning out of the December 5 meeting was that the OPEC+ alliance agreed to slash a further 500,000 b/d, with Saudi Arabia pledging an additional voluntary cut of 400,000 b/d. Collectively, this would raise the club’s total supply reduction to 2.1 mmb/d – or over 2% of global oil demand – up from the previous 1.2 mmb/d target. Beneath those headlines, however, the details of the new adjustment to the deal were murkier. The 500,000 b/d cut is, in fact, more of a formalisation of the current production levels within OPEC. It won’t remove additional barrels from the market, but it won’t add them back into global supply either.
Saudi Arabia is, once again, key to this equation. Even with the attacks on the heart of its crude processing facilities in September, Saudi Arabia has been shouldering the extra burden within the deal, making up for errant members that have consistently overshot their quotas. These include Nigeria and Iraq, and crucially Russia. The caveat that the new targets – especially Saudi Arabia’s voluntary portion – will only come into force if all members of the OPEC+ club implement 100% of their pledged cuts underscores the Kingdom’s new, more hardline stance that full compliance is required before it makes additional concessions. Because even with the declines in Venezuela and Iran, Saudi Arabia has trimmed its output to below 10 mmb/d in an attempt to show leadership through example. But its patience is now wearing thin.
But it is those details that are sketchy right now. OPEC states that the new deal formalises current production levels and will make up for Saudi overcompliance by ‘redistributing’ those volumes across other OPEC+ members. But no specifics on that split were given – a worrying sign that more arguments were coming – with the group preferring to meet compliance first before moving on to the fresh cuts.
Full adherence to the targets is tough. But it might get easier. Russia – which has only met its quota 3 months this year, when the Druzhba oil pipeline crisis hit – won a significant concession. Its argument that the only reason it was not hitting its target was due to condensate production, a by-product of its increasing natural gas output, was accepted; the quotas will exclude condensate, and Russian Energy Minister Alexander Novak was optimistic that it could meet its quota of a 300,000 b/d reduction for the first quarter of 2020. And the first quarter of 2020 is crucial, as that is the remaining length of the supply deal. Ahead of the March 31 expiry in 2020, OPEC has agreed to hold an extraordinary general meeting to assess the situation – the point which the deal either ends or is extended.
Underpinning this bet is some sentiment-based optimism from OPEC. The rise and rise of US shale has diluted OPEC’s impact over the past five years, requiring it to make deeper and deeper cuts that were muted by increasing amounts of American crude. But OPEC is betting that the wind will go out of US shale sails next year, hoping that it will allow output within OPEC+ to rise again. But low growth in US shale does not mean no growth. And perhaps for this reason, the price impact on the new OPEC decision has been muted. Despite the club’s attempt to prove that it is still effective, the market simply doesn’t believe the new cut will do much. Crude prices reflect that. Call it cynicism, but the market might have more faith if full compliance was reached and that is exactly what OPEC is striving towards.
The OPEC+ supply deal:
Headline crude prices for the week beginning 2 December 2019 – Brent: US$61/b; WTI: US$55/b
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