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So, after a week where more than 10% of global trade had to be halted, re-routed or completely disrupted, the 400m long Ever Given cargo ship that was wedged diagonally in the Suez Canal in Egypt has been unstuck. Nearly two dozen tugboats and assistance ships, along with many land salvage vehicles digging up sand, freed the massive ship after a six-day ordeal. The world cheered. Global trade was restored. About US$10 billion per day of trade, to be precise.
The Ever Given – operated by Taiwan’s Evergreen Marine – was carrying cargo as varied as tracksuits, electrical equipment and ginger when a sandstorm reduced visibility and strong winds blew the ship off course, such that its bow and stern were wedged on opposite sides of the Canal. The blockage, which happens at one of the narrowest areas of the Canal from its southern entry point from the Gulf of Suez, prevented over 300 vessels (including 24 crude oil tankers) from navigating one of the most important maritime arteries – the shortcut between Asia and Europe that shaves at least two weeks off the alternative journey through the Indian Ocean, past the Cape of Good Hope and up the coast of West Africa. When news of the Canal blockage first broke, crude oil prices jumped, although that rise was tempered by fears over fuel consumption growth as a result of new Covid-19 accelerating infections in Europe. When the Ever Given was finally freed, crude prices immediately fell by 2%.
The sensitivity of crude prices to the temporary crisis in the Suez does illustrate the hazards of maritime trade. For most part, shipping – which is the most efficient way of transporting huge amounts of cargo worldwide – travels on open seas. But it is not always smooth sailing. There are several maritime chokepoints in the world where a crisis like this can erupt. Blockage at any one of these is a tremendous disruptor, but in the world of energy trading and transport, it takes on a different dimensions because of complex geopolitics.
The EIA estimates that some 5.5 million b/d of crude oil is transported through the Suez Canal annually, mainly bringing crude oil and LNG from the Middle East to energy-hungry markets in Europe. That’s roughly 10% of global maritime oil trade, which makes the Suez the fourth busiest chokepoint for oil transit. The Ever Given crisis lasted for 6 days, but it could have easily been six weeks if it wasn’t for a favourable combination of high tides and specialist salvagers. If that happened, then the entire maritime supply chain would be chaos. Ships would have to be re-routed through the treacherous waters around South Africa, maritime brokering and insurance would be in a frenzy and onshore supply chains from High Street clothing stores to ingredients for restaurants could be affected. And it has happened before. The Six Day War between Israel and Egypt in 1967 resulted in the entire canal being closed for eight years, with both entrances littered with bombed shrapnel and ocean mines. Egypt and Israel have settled their differences since, but there is no guarantee that this can’t happen again.
And what about the 3 other maritime chokepoints, which rank above the Suez in oil transit volumes? Right at the top of the list is the Strait of Hormuz, the narrow sliver of waterway that connects the Persian Gulf to the Indian Ocean. Just 33km at its narrowest, this is the riskiest maritime chokepoint in the world in terms of crude trading. On opposites ends of the Strait are enemies – Iran on the north, and Saudi Arabia and its allies on the south. Nearly 33% of the world’s maritime oil trade passes through this small channel, making it particularly vulnerable to disruption. And it has been disrupted. Many times before. Even the threat of disruption – as Iran has wielded recently in its squabbles with Donald Trump’s USA – can send crude prices soaring. Because of that warships from the USA, UK and France are a regular presence in Hormuz, attempting to act as a deterrent if the always-volatile situation in the Middle East does flare up. It has not fully yet, but if it does, the consequences are devastating.
In second place is the Straits of Malacca. Though much wider than Hormuz, the Straits of Malacca is also far busier, since its traffic is not only focused on energy, but almost any cargo that is traded by East Asia westwards. In oil terms, about 30% of global maritime volumes pass through the Straits, which is controlled by Malaysia on one side and Indonesia on the other. And like Hormuz, there is no real alternative to the Straits of Malacca is terms of shipping traffic; alternative routes through the Indonesian archipelago are simply too narrow or too hazardous. Which is why there have been several ideas floated to reduce the risk of disruption here: slicing a canal through the Isthmus of Kra in Thailand, and perhaps (in oil terms) building oil pipelines cutting across Thailand to bypass the Strait or winding pipeline systems starting in Myanmar snaking up to China’s interior. Because the risk is there. In the 1960s, the Konfrontasi between Indonesia and Malaysia led the Straits to be used as a battleground, both weaponised and full of weapons. If that ever repeats, then more than oil is at stake.
The Cape of Good Hope in Africa is the third largest chokepoint for maritime oil trade (roughly 10%), but it is the fifth that is more risky – the Bab el-Mandab Strait between Yemen and Eriteria/Djibouti, that is the entrance to the Red Sea and the Suez Canal beyond. Any ship that passes through the Suez is most likely to pass through Bab el-Mandab, making it an equally risky flashpoint for any disruption in global oil trade. And given the instability in Yemen that has been egged on in proxy by Iran and Saudi Arabia, that conflict has occasionally spilled offshore. Not to mention the threat of pirates based in Somali that prowl these waters.
Other marine chokepoints have a lower risk factor, though the risk is never zero. The important ones for energy are the Turkish Straits (connecting Black Sea oil to the wider world, 5% of global maritime oil trade) and the Panama Canal (increasingly important given the USA’s accelerating role in crude and LNG exports, 2%). The others – the Danish Straits and the Straits of Gibraltar – are, currently at least, quite safe. But, as the Ever Given crisis proves, disruption could occur at any time. A single ship caused a global tidal wave of interruption, heightened by increasingly complex and interlinked global supply chain. That thought will be on the minds of the entire maritime industry – and on crude oil trading – as key players start looking at ways and methods to prevent such a disaster from happening again. Hopefully.
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Catfish is a freshwater fish that is now selling well. It is also very simple in the usual breeding. As long as choose a place with good water source, freshwater, no industrial pollution, good soil quality, and convenient transportation. The bottom of the pool is flat, the pond base is strong, the water retention performance is good, and there is no high damper in the surrounding air. After nuisance treatment, it should be properly placed at the appropriate time. Feeding regularly and quantitatively every day, change the water in time.
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Advantage of floating fish feed pellet
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How much does the feed pellet machine price ?
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And then, there was hydrogen. Soon after the universe was formed through the Big Bang, the vast expanse of heat that sent time and space hurtling in infinite directions started to cool down. When this happened, the first nuclei began capturing electrons, forming the first two elements: hydrogen and helium. The lightest of all the gases, hydrogen is the first element in the periodic table – with only one proton and one electron – and the most abundant element in the universe. High school textbook facts aside, hydrogen is now a word buzzing with charisma in the energy industry as it could be the answer to decarbonising the world’s industries and spearheading a renewable future.
A quick primer on hydrogen. Current global demand stands at about 75 million metric tonnes, more than three times higher than equivalent consumption in 1975. About 40 million tonnes, or 53%, of this hydrogen is used in oil and natural gas refining – in processes such as hydrocracking or hydrotreating – while most of the remainder is used in the fertiliser industry to produce ammonia. Only a scant amount – 0.5% - is used in other applications.
But it isn’t about where hydrogen has been, but where it could go that has the world – energy and otherwise – excited. Over the past decade, many leading nation have started policies researching and supporting investment in hydrogen technologies, with at least 50 targets, mandates and policy incentives in place, and more arriving. There is a North-South divide in this, since hydrogen technology is being pursued by the likes of the European Union and Japan in their quest for a low or net-zero carbon future, while hydrogen is not mentioned at all in the most recent energy plans of countries such as Indonesia, Thailand, Pakistan or Nigeria. But the potential for hydrogen are a low-carbon replacement for heavy-carbon sources such as coal and fossil fuels is vast. In industry, where most of today’s hydrogen is used, hydrogen could increasingly be used in methanol and steel production, replacing the pollutant-heavy coal that coal, for example, plays in steel-making. In transport, hydrogen fuel cells are the future of road transportation, with alternatives also being developed for aviation and shipping. Hydrogen could also be blended in with existing natural gas networks without any major change in infrastructure for heating and cooling, while hydrogen-linked battery technologies are also the leading options for storing renewable energy from sources such as solar and wind farms. It could also be directly burnt in gas turbines as power generation; or more accurately, hydrogen-based ammonia could plan that role. With all these options in place – and the government backing to make it happen – it is not inconceivable that hydrogen demand could triple again over the next 30 years to over 200 million tonnes by 2050.
The problem is supply. Hydrogen is almost entirely supplied through fossil fuels, with an estimated 6% of global natural gas and 2% of coal dedicated solely to hydrogen production. So while hydrogen can be the replacement for carbon-intensive industries and fuels, the production of it is already carbon-heavy, with hydrogen production releasing some 830 million tonnes of carbon dioxide annually, more than the UK and Indonesia combined. Renewable hydrogen production is possible – mainly through water electrolysis – but infrastructure is scant because costs can be three times higher. This is why it is much cheaper to produce hydrogen in regions like the Middle East, Russia and North America - because natural gas is the largest component of production cost at between 45-75% - while the likes of Japan, China, India and South Korea have to import expensive natural gas to make even more expensive hydrogen.
Which is why the world is now no longer just talking about hydrogen, but an entire rainbow of hydrogen colours. There is brown hydrogen – directly extracted from coal using gasification. Then there is white hydrogen that is a by-product of industrial processes or black/grey hydrogen that is produced from natural gas using steam-methane reforming. Yellow hydrogen is produced through solar grid electricity via electrolysis while pink/red/purple hydrogen is a carbon-free option created through nuclear power that is politically-unfriendly. But the colours that are getting everyone the most excited are in the green-blue spectrum: turquoise hydrogen produced through the thermal splitting of methane that leaves solid carbon rather than carbon dioxide as a by-product; green hydrogen formed through water electrolysis with zero carbon emissions; and then blue hydrogen that is conventional black/grey or brown hydrogen but with all carbon dioxide emitted sequestered through Carbon Capture and Storage (CCS) technology.
The ideal solution is green hydrogen, but costs and infrastructure may prevent this from ever being the only solution. The same caveat applies to turquoise hydrogen. Like it or not, blue hydrogen – which the probably the cheapest of the low/zero-carbon solutions but has opposition from certain quarters – will still play a major role in satisfying future hydrogen demand, which in itself should start a virtuous loop of reducing carbon emissions in industries where hydrogen as a fuel can take hold. The world’s leading energy supermajors and majors are already preparing for this. BP has announced plans to build the largest blue hydrogen production facility in the UK by 2030, while the US climate envoy for the Biden administration John Kerry is calling on the US oil and gas industry to embrace ‘huge opportunities’ in hydrogen. Shell has invested in a tech start-up developing a hydrogen-based zero-emissions aviation engine, while even state oil firms are making moves: Malaysia’s Petronas is expanding its investment into green and blue hydrogen along with advanced CCS projects, while the ever-vigilant Equinor is already part of the EU’s largest green hydrogen project that expects to have 10 GW of capacity by 2040 using renewable offshore wind farms. Crude oil giant Saudi Arabia has plans to become the world’s largest hydrogen exporter through a combination of blue hydrogen from its natural gas reserves and green/yellow hydrogen from solar power plants being built at the city of Neom along the Red Sea by 2025. And Hyundai Oilbank has a unique solution as well: it has signed up to import LPG from Saudi Aramco and convert that into blue hydrogen onsite at its Daesan refinery complex in South Korea’s Seosan province, which could be a model that proves that clean hydrogen does not necessarily have to be produced where the source fuel originates to make the best commercial sense.
If the buzzword for the 2000s and 2010s in the energy industry were LNG and shale, respectively, then the buzzword for the 2020s is likely to be hydrogen. Too many moves are being made by governments and too many investments approved by industry titans for this to be ignored. After all, a net-zero world will benefit everyone. And it seems that the first ever element to be create in this universe is the key to creating that future.
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