By Roudi Baroudi

Some of the latest punditry has it that Qatar’s economy is teetering on the brink of disaster because of the COVID-19 crisis, which has been steadily eroding demand for the country’s most important export, natural gas. Obviously the situation is less than ideal, but much of the doom and gloom stems from a failure to appreciate just how well prepared the country is for all manner of obstacles.

Journalists and other observers have watched the market for crude oil collapse to the point where prices for some futures contracts recently went into negative territory – i.e. producers in some parts of North America actually had to pay customers to take oil off their hands. This, in turn, is causing a slew of US and Canadian oil companies, especially smaller ones, to stop extracting crude, and many are going bankrupt. Similar pressures will arise for gas producers, these folks argue, and since Qatar is the world’s leading producer and exporter of liquefied natural gas (LNG), it will face the biggest problems.

To be sure, the global crisis caused by COVID-19 has subjected the entire world to some freakish pressures, including unprecedented drop-offs in demand for certain goods and services, among them several energy products previously soaked up by (now idled) planes, trains, and automobiles (not to mention cruise ships, factories, hotels, etc.). Thus far the consequences for LNG have been less dramatic than those for crude oil, but nor can they be ignored, especially for developing countries whose economies and financial stability are heavily dependent on constant flows of gas revenues from exports.

For multiple reasons, however, Qatar has to be considered far more resilient than other major LNG producers. For one thing, it has much deeper pockets that give it considerable wherewithal to withstand even a prolonged period of lower gas revenues. For another, Qatar’s energy interests go far beyond the extraction of its gas resources for export. It is now fully engaged at several points along the hydrocarbon value chain, and this in multiple countries, all of which provide diversification of revenues and therefore dilution of negative impacts. Perhaps most importantly, for almost three years now, the country has been fortifying itself against the effects of an illegal economic and transport blockade led by Saudi Arabia and followed by several other Gulf Cooperation Council (GCC) member states, plus Egypt and others. To say the least, Qatar has proved a tough nut to crack: in fact, the experience has made the whole country much more efficient, far more self-sufficient, and even more self-confident than ever before.

One of the drivers of this success has been government-owned Qatar Petroleum (QP), one of the strongest and most influential companies on the planet, and it has not got to this position by simply opening a spigot in the sand and then spending the proceeds. Instead, QP reached its current lofty status by, first, making its bet on LNG at precisely the right time in history, just as the environmental concerns associated with oil made natural gas a more palatable choice and the world’s energy mix started transitioning to a higher proportion of renewables and other alternative technologies. Second, Qatar then used its role as the world’s most important LNG exporter to become a force for stability in a burgeoning global gas market, maintaining safe and reliable supplies that have allowed customers around the world to grow their economies.

Second, QP has not remained a one-trick pony. Instead, it and its subsidiaries have diversified with gusto – and not just in the usual sense of producing petrochemicals, aluminum, and fertilizers on their home turf. Rather, the company has reached far beyond Qatar, the GCC countries, and even the broader Middle East and North Africa region to make acquisitions around the globe. Acting alone or in concert with major partners like Britain’s Shell, France’s Total, Italy’s ENI, and the USA’s Chevron and ExxonMobil, the past couple of years have seen QP take up or renew stakes in exploration, production, and/or processing assets in at least a dozen countries, including Argentina, Brazil, Cyprus, Congo Brazzaville, Guyana, Ivory Coast. Kenya, Mexico, Morocco, Mozambique, Namibia, Oman, South Africa, and even the United Arab Emirates.

Perhaps the biggest play of the past few years has been in the United States, where QP’s activities have included partnering with ExxonMobil (Qatar’s single largest foreign investor) for a $10 billion project to build a two-train LNG export facility adjacent to the existing Golden Pass import terminal in Texas.  QP also added to its footprint in the USA by teaming with Chevron Phillips Chemical, a joint venture between Chevron and Phillips 66, to develop what could be the world’s largest ethane cracker and derivatives units somewhere on the US Gulf Coast. QP will have a 49% stake in the $8 billion complex, and Chevron Phillips Chemical has agreed to build virtual twin of it at Ras Laffan – hub of Qatar’s gas industry.

Alongside its solid American investments, the company also continues to consolidate its access to existing markets in Europe and Asia, and to increase its capacity to supply those markets. It has recently signed long-term processing and/or storage contracts at terminal facilities serving key LNG markets, including Montoir-de-Bretagne, France (3 million tons per annum [MTA] until 2035), and Zeebrugge, Belgium (100% of regasification capacity until 2044). In addition, QP subsidiaries hold stakes in major terminals like the United Kingdom’s South Hook (67.5%) and Italy’s offshore Adriatic facility (23%). In April, it signed a $3 billion contract to book a Chinese shipbuilder for the construction of new LNG carriers, some 100 of which it expects to need in the coming few years.

All the while, QP has continued to rack up agreements with both new and existing customers, including LNG sales to Kuwait and Vietnam; naphta deals with Japan’s Marubeni Corporation, Shell, Thailand Chemicals, and Vietnam; condensate feedstock sales to ExxonMobil in Singapore; and liquefied petroleum gas contracts with China’s Oriental Energy and Wanhua Chemicals.

And all this is not to mention QP’s massive undertaking to expand LNG output from 77 MTA to more than 110 MTA. When the COVID crisis hit, far from fretting the short- and medium-term obstacles, the company’s response was to double down and take advantage of lower prices for construction materials by increasing capacity to a whopping 126 MTA by 2027.

It should be recalled, too, that QP has managed all of these feats while its home country has been fending off the aforementioned Saudi-led siege. Qatar’s public and private sectors alike have demonstrated world-class resilience since the blockade was imposed in 2017, so there is no reason to believe they will shrink before this new challenge. On the contrary, Qatar is – and will remain – a trusted source of stabilization in global markets.

Whatever the temporary inconveniences caused by the pandemic, both Qatar and QP remain bullish on the future – and with good reason. They did not get to where they are by accident, rather by well-timed investments and a commitment to ensuring stable markets for their customers. In fact, it could be fairly stated that Qatar and its flagship gas company created the modern global gas market, and they did so in such a way as to deliberately avoid much of the volatility associated with crude oil – for instance by eschewing the establishment of a cartel like OPEC. The current crisis could well require Qatar to make uncomfortable decisions, but its long-term trajectory – to keep expanding its role as a force for good in energy circles by providing win-win scenarios – is unlikely to be affected.

Roudi Baroudi is a four-decade veteran of the energy industry who currently serves as CEO of Energy and Environment Holding, an independent consultancy based in Doha.

The coronavirus outbreak that has sent markets worldwide on a collective nosedive is forcing U.S. oil and gas explorers already burning through borrowed cash and failing to deliver returns to the brink of distress.

Drillers’ fall from grace has worsened as shareholders increasingly demand they shift their focus to generating cash flow, instead of increasing production at any costs. Now, as bonds collapse, they face the double whammy of upset investors on both sides of capital markets — equity and debt.

The stocks of U.S. explorers are on average worth just a quarter of their peak in mid 2014, when oil started plunging from more than $100 a barrel. The S&P Oil & Gas Exploration and Production Index has plunged 82% since.

This week’s selloff exacerbated challenges facing distressed energy borrowers, which have been pressured by high debt loads, low commodity prices, disappointing earnings, and investors reluctant to keep financing them.

“The market has not really been open, or certainly hasn’t been bullish, for energy companies for a long time now,” Spencer Cutter, an analyst for Bloomberg Intelligence, said in an interview Thursday.

High-yield energy has lost nearly 8% this year, compared to a loss of only 0.8% for the broad category of high-risk borrowers, according to Bloomberg Barclays data. Energy is the biggest contributor to $105 billion of outstanding high-yield debt trading at distressed levels, with a distressed ratio of about 26%, according to Bloomberg Intelligence

Chesapeake Energy Corp., Whiting Petroleum Corp. and Gulfport Energy Corp. this week became the face of this dramatic change of fortune since the heyday of the shale boom and Gulf of Mexico exploration.

Chesapeake

Once at the vanguard of the U.S. shale revolution, Chesapeake has fallen headlong toward collapse as it and rival drillers flooded the U.S. with excess natural gas, crushing prices and destroying billions of dollars in value.

Its options for dealing with its towering debt load are scant. Chief Executive Officer Doug Lawler mapped out a survival strategy predicated on a sweeping divestiture program that must be consummated within months in a market already glutted with North American gas holdings.

Chesapeake’s shares have all but evaporated in value, trading below 30 cents. It’s 11.5% bonds maturing in 2025 have plunged 28% this week to 57 cents on the dollar. The yield on the security, a measure of how much investors will demand in gains to take the risk of holding it for a year, has surged to almost 30%, about the same level as government bonds from troubled Lebanon.

Whiting Petroleum

Whiting’s stock is down 75% this year amid reports that the oil producer is holding discussions with advisers to review its capital structure. The Denver-based company is looking at a potential debt exchange, Debtwire reported this month, citing people familiar with the matter.

The shale explorer’s 2020 bond has plummeted 26% this week to 37.5 cents on the dollar, with the yield jumping to about 30%.

Gulfport Energy

Gulfport bonds, along with Chesapeake’s and Whiting’s, were among the energy debt securities that most tanked this week.

Earlier this month, Piper Sandler & Co. downgraded Gulfport Energy to neutral telling investors in a note: “darkness has devolved into pitch black” for the firm’s outlook on the natural gas market.

Gulfport’s 6% bonds due October 2024 fell to a record low of 33.75 cents on the dollar, to yield 37% on Friday.

Its shares have followed Chesapeake into penny stock territory, closing Friday at little more than 80 cents, after a 35% plunge this week.

McAfee security researchers were able to trick Tesla vehicles into breaking the law by placing electrical tape on speed limit signs, in a demonstration of another vulnerability for self-driving cars.

In findings disclosed by McAfee through its official blog, the security company revealed that it fooled 2016 models of Tesla’s Model X and Model S, which used camera systems by Intel’s Mobileye, into breaking speed limits with the strategic placement of electrical tape.

Researchers applied a single piece of black electrical tape to extend the middle line in the “3” of a 35-miles-per-hour speed limit sign. This tricked the MobilEye camera into reading the sign as 85 miles per hour, forcing the Tesla vehicle’s cruise control system to accelerate the car beyond the true speed limit.

Intel disputes that the trick was an adversarial attack, as the tape may also have fooled some human drivers into thinking that the tampered sign said 85 miles per hour.

Tesla, however, stopped using Mobileye’s camera systems in 2016, which means that the newer Tesla vehicles are not affected by the electric tape trick. In addition, other vehicles using newer versions of Mobileye technology also appear to be resistant to the manipulation.

Even before the deadly virus struck, another menace confronted the global energy industry: the warmest winter anyone can remember. Russia’s winter was so balmy that snow was trucked into downtown Moscow for New Year, and bears came out of hibernation. In Japan, ski competitions were cancelled and the Sapporo Snow Festival had to borrow snow. On the shores of Lake Michigan, Chicago residents watched playgrounds and beaches disappear under the waves as warm weather swelled the water level. Norwegians basked in T-shirts in January. London’s spring daff odils have already flowered.

For global energy markets it’s a disaster — and as the world continues to get hotter it’s something producers, traders and government treasuries will have to live with long after the acute dislocation of the coronavirus has passed. The industry relies on cold weather across the northern hemisphere to drive demand for oil and gas to heat homes and workplaces in the world’s most advanced economies. Climate activists might find a certain poetic justice in energy markets suffering from the global warming caused by fossil fuels. Burning oil and other fuels to heat homes and businesses accounts for as much as 12% of the greenhouse-gas emissions blamed for raising the world’s temperatures. The loss in global oil demand due to mild temperatures is probably about 800,000 barrels a day in January, according to Gary Ross, chief investment off icer of Black Gold Investors LLC and founder of oil consultant PIRA Energy. That’s the equivalent of knocking out Turkey’s entire consumption. The natural gas market has taken a similar hit. “The oversupply keeps coming and winter so far hasn’t really showed up,” said Ron Ozer, chief investment off icer of Statar Capital LLC, an energy- focused hedge fund in New York. Last month was the hottest January ever in Europe, the Copernicus Climate Change Service reported. Surface temperatures were 3.1 degrees Celsius (5.6 degrees Fahrenheit) warmer than average. Northern Europe was particularly hot, with some areas from Norway to Russia more than 6 degrees above the 1981- 2010 January average. Temperatures in Tokyo took until February 6 to hit freezing point, the latest date on record. Globally, the last five years have been the hottest for centuries, as greenhouse gases change the Earth’s ecosystem. Natural gas prices have collapsed globally as the weather crimped the need for heating. US futures are trading at the lowest levels for this time of the year since the 1990s. Asian spot prices for liquefied natural gas have crashed to a record low as demand slumps in the world’s three biggest importers— Japan, South Korea and China. Based on weather-driven demand data, the US and Asia are having their warmest winters on record and Europe is having its second warmest, according to Joe Woznicki, a meteorologist for Commodity Weather Group LLC. A key measure of heating demand, known as heating degree days, is 12% below the 10-year average in the US, 14% lower in Asia and 13% in Europe. And it’s not just markets that are reeling. It’s also an issue for government treasuries. Russia, for example, relies on its oil and gas companies for around 40% of budget revenues. Oil exports have been holding steady, but gas exports are dropping. Sergei Kapitonov, gas analyst at Moscow- based Skolkovo Energy Center, estimates Gazprom’s exports to Europe and Turkey fell in January by about a quarter from a year earlier. Gazprom stock is down 11% this year. The collapse in oil prices — spurred by the coronavirus but pushed along by the warm weather — prompted a push to urge Opec+ allies for a production curb last week. Three days of wrangling in Vienna didn’t produce a clear result. From Algeria to Venezuela, similar dynamics are in play. This year’s especially warm winter was triggered by events in the Arctic. An intense weather pattern there kept the cold locked in the Arctic region, leaving North America and Eurasia relatively mild. “When the winds are stronger they act as a barrier to keep Arctic air focused over the pole and keeps them from spilling southward,” said Bradley Harvey, a meteorologist with Maxar in Gaithersburg, Maryland. “That is likely to continue for the balance of the month and even into March.” Rain patterns have also been unusual— and that’s added to volatility too. In Norway, the biggest source of electricity comes from running water through turbines. The wettest January since records began turned a deficit of water in reservoirs in December to a huge surplus in January—and sent prices crashing in the Nordic power market. The abnormal winter could hardly have come at a worse time for the US gas market, which is already suffering a glut. US shale drillers have delivered two years of unprecedented production growth and in the Permian Basin of West Texas and New Mexico there’s so much gas — the byproduct of drilling for oil — that producers are even paying to get rid of it. Europe and Asia were set to become important export outlets for American gas. Then the weather changed. “It’s unfortunate that we’re making all this LNG that’s not worth very much around the world,” Corey Grindal, senior vice president of supply at Cheniere Energy Inc, said.

LONDON – BP has pulled out of Iraq’s giant Kirkuk oilfield after its $100 million exploration contract expired with no agreement on the field’s expansion, dealing a fresh blow to Iraq’s hopes to increase its oil output, three sources told Reuters.

The move came as Western energy companies are reassessing operations in Iraq amid political turmoil following months of anti-government protests and a flare-up in tensions between the United States and Iran in the country.

BP informed Iraqi authorities in December that it was removing its staff from the oilfield in the north of the country after its 2013 service contract expired at the end of 2019, the sources familiar with the matter said.

A senior source at Iraq’s North Oil Company (NOC), which oversees the Kirkuk operations, confirmed BP’s withdrawal.

“The results of its field study for Kirkuk oilfield development have been handed over to the North Oil Company and unfortunately it was below expectations… at least for us,” the official said.

“It’s very obvious study results were not encouraging for BP to extend its operations,” he added.

The Iraqi government did not reply to a request for comment.

BP confirmed it had completed field work and studies and said it gave its recommendations for the development of the field to the NOC. The London-based company did not comment on staff movements.

“In 2013, BP signed a letter of intent with the North Oil Company of the Iraqi Ministry of Oil to support field activity studies in Kirkuk. As planned, in December 2019 BP completed field work, studies and recommendations,” it said.

Another senior NOC engineer said BP staff members left their laptops with the NOC after completing the survey and technical study of the field.

Iraq was hoping BP would help it triple output from the field to 1 million barrels per day (bpd) — more than one-fifth of Iraq’s current production and 1% of global output.

BP’s contract was put on hold in 2014 when the Iraqi Army collapsed in the face of Islamic State’s sweeping advance in northern and western Iraq, allowing the Kurdish regional government (KRG) to take control of the Kirkuk region.

Baghdad regained full control of the deposit from the regional government in 2017 after a failed Kurdish independence referendum, at which point BP resumed its studies on the field.

Kirkuk, where oil was discovered in 1927, is the birthplace of Iraq’s oil industry. BP and Iraq’s Oil Ministry signed in 2013 a letter of intent to study the development of the field with a planned spending of $100 million.

BP’s work included a 3D seismic study of the field’s reservoir to expand on the existing 2D data.

Kirkuk is estimated to contain about 9 billion barrels of recoverable oil, BP said.

Most of Iraq’s crude is produced from areas managed by the central government of Baghdad, in the south, and exported from southern ports on the Gulf. The KRG exports about 300,000 bpd of crude from northern Iraq through a pipeline across Turkey.

(MENAFN – Gulf Times) Top executives at China’s leading energy companies are set for a power shake-up as the nation takes steps to reorganise and revamp its leadership and energy infrastructure.
The executive changes at the state-owned giants come as the sector is under pressure to increase competition and boost domestic output in the face of growing dependence on energy imports.
The government this week opened its upstream sector to foreign drillers and last month rolled out plans to spin off the nation’s pipelines into a new firm to allow more companies access to energy infrastructure.
Dai Houliang, chairman of refining giant Sinopec Group, is set to be named the new chairman and party secretary of the country’s biggest oil firm, China National Petroleum Corp, according to people familiar with the matter.
Wang Yilin, the current CNPC chairman, is set to step down and retire, they added.
The top job in Sinopec Group, formally known as China Petrochemical Corp, will be taken by Zhang Yuzhuo, former chairman of coal colossus China Shenhua Energy Co, said the people who asked not to be identified as the information is private.
Li Fanrong, deputy director of China’s National Energy Administration and former CEO of CNOOC Ltd, will be named as general manager of CNPC, said the people.
Zhang Wei, current general manager at CNPC, will be appointed chairman of the newly-established national oil and gas pipeline company.
The decision by China’s central government is set to be announced as early as this week. Nobody responded to emails or calls sent to CNPC and Sinopec’s press offices.
State Grid Corp, China’s largest operator of electric networks, also named a new top executive, putting Mao Weiming in place as chairman and party chief.
CNPC is the nation’s largest driller and natural gas importer, and is the parent of PetroChina Co, while Sinopec Group is the world’s largest oil refiner by capacity and parent of China Petroleum & Chemical Corp.
The appointment of the new CNPC executives will be especially positive for PetroChina, according to analysts at Sanford C Bernstein & Co including Neil Beveridge in a note to clients.
Dai could help shape up the company’s struggling refining and petrochemical division, while Li’s stint at Cnooc proved him ‘one of the highest calibre CEOs within China’s oil and gas industry over the past decade.
‘We view his appointment as a strong sign that significant reform could take place within the PetroChina which is undergoing major change with pipeline reform, Beveridge said.
Even as PetroChina and Sinopec have raised spending to boost output heeding calls from President Xi Jinping to bolster the nation’s energy security the country has become more dependent on foreign supplies.
China’s dependence on overseas oil has grown from less than 50% in 2005 to nearly 75% by the end of last year as more than two decades of super-charged growth have made it the world’s biggest importer.
China also became the world’s biggest natural gas importer in 2018, overtaking Japan after a government push for cleaner energy caused demand to surge.

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European coal faces another depressing year as natural gas floods the region and clean-energy policies reduce demand for the dirtiest fossil fuel.

Coal use across seven European economies fell to historic lows last year, pushing benchmark rates down by almost a third to $62 a ton. The prospects for 2020 are looking equally bleak, with analysts from S&P Global Platts and Capital Economics predicting prices plunging to the $50 mark, the lowest in four years.

It’s the latest indication that the economics for burning coal have collapsed in little more than a year since the commodity hit $100 a ton. Europe’s goal of zeroing out carbon emissions by the middle of the century along with ever-cheaper wind and solar power and falling gas prices all point to drastic reductions for generators that burn coal.

“Although we saw coal generation pushed to minimum levels in the second half of 2019, it should fall again year-on-year in the first half of 2020 due to low gas and stable carbon pricing,” said Joe Aldina, S&P Global Platts’ head of coal analytics.

For most of last decade it was more profitable to burn coal than gas in Germany, Europe’s biggest economy. That relationship was turned on its head last year as imports of liquefied natural gas and mild weather pushed down prices for the cleaner fuel, encouraging utilities to switch away from coal.

Dark spreads indicating the theoretical profit for burning coal to make power in Germany have been falling further behind spark spreads for using gas. The trend, according to Bloomberg analytics, becomes especially acute later this year.

Gas Glut

Part of the reason is the abundance of natural gas. Ample flows from pipelines along with near-record levels of LNG shipments arriving in Europe have left storage sites brimming.

The gas glut may worsen after last month’s deal between Russia and Ukraine to keep gas flowing to Europe. Construction of another direct route to Europe, the Nord Stream 2 pipeline to Germany, is expected to finish this year even though the U.S. imposed sanctions on the project.

“The gas transit agreement between Russia and Ukraine and soon-to-be completed Nord Stream 2 pipeline, allied with the prospect of higher U.S. LNG exports means that the European market will be awash with gas supplies in 2020,” said Franziska Palmas, assistant economist at Capital Economics.

While European year-ahead coal prices have slumped, the penalty for using the fuel has increased as the cost of carbon emission permits surged five-fold since 2017. At the same time, benchmark month-ahead gas contracts have slumped to 42% below the 10-year seasonal average.

“I don’t expect coal to fall below $50,” said Elchin Mammadov, an analyst at Bloomberg Intelligence in London. “Which is why I don’t think there will be gas-to-coal switching. If anything, it’ll be the other way round given that gas will likely stay cheap throughout the year.”

The pessimistic outlook for coal view is not unanimous. Perret Associates expects a global surplus of the commodity to swing into deficit by the end of this year as India and countries in the Pacific Rim region make up for a drop in demand in Europe.

Enter text here This is the year when shale drillers are finally going to deliver solid returns to investors that have grown weary of the industry’s decade-long cash burn, the head of explorer Parsley Energy Inc said. Why? Because for the first time the producers behind the US shale boom are collectively showing restraint in capital spending at a time when crude prices are rising and struggling oil-service providers are lowering their rates, Parsley chief executive officer Matt Gallagher said in an interview. In the past, explorers would instead have taken advantage of that to drill at full throttle again. “It’s the proof-in-the-pudding year,” Gallagher said. “We’ve been telling generalists in the financial community that you’re going to get a payday for investing in this great renaissance.” Whether investors will be easily convinced is yet to be seen. After Wall Street poured more than $200bn in a growth-focused, debt-driven shale patch in past years, most drillers have yet to produce free cash fl ow that would ensure healthy returns.

The S&P index of exploration and production companies fell 11% last year, even as oil jumped 34% in New York. But Parsley might have more reasons to be optimistic than others. The Austin, Texas-based company on Thursday won shareholder approval to acquire rival Jagged Peak Energy Inc for $1.8bn. Its shares fell 1% to $18.27 at 10.34am in New York as an easing of fears of disruption to Middle Eastern supplies pushed West Texas Intermediate, the US bench- mark, toward its biggest weekly loss since July. It’s a deal that Gallagher had to hit the road and man the phones for in order to convince investors of its potential. After an initial negative reaction that sent the stock plunging 11% the day the deal was announced, the shares have rebounded 20% since. That’s about double the gain for S&P’s E&P index over the same span, at a time when the market has mostly punished buyers.

Even as he works to integrate Jagged Peak into Parsley, Gallagher re- iterated that the newly merged company is a good takeover target. “It’d be very attractive to a lot of companies,” Gallagher said, declining to name possible suitors. “I don’t think that anything done in this deal would negate that.” Gallagher, who took over as CEO from Parsley founder and chairman Bryan Sheffield last year, expects a continued throttling back of US oil growth, to an expansion of about 500,000 barrels a day in 2020, with even slower growth through 2025. That’s roughly half the annual growth expected by the US Energy Information Administration. American output ended 2019 at a record level of nearly 13mn barrels a day, more than any other nation and up from less than 12mn at the start of last year, according to weekly EIA data. This will finally be the year that investor skepticism is eased, Gallagher predicts.

Coal consumption is set to rise in the coming years as growing demand for electricity in developing countries outpaces a shift to cleaner sources of electricity in industrialised nations. While use of the most polluting fossil fuel had a historic dip in 2019, the International Energy Agency anticipates steady increases in the next five years. That means the world will face a significant challenge in meeting pledges to reduce greenhouse gas emissions that cause global warming. “There are few signs of change,” the agency wrote in its annual coal report released in Paris yesterday. “Despite all the policy changes and announcements, our forecast is very similar to those we have made over the past few years.” While this year is on track for biggest decline ever for coal power, that’s mostly due to high growth in hydroelectricity and relatively low electricity demand in India and China, said Carlos Fernandez Alvarez, senior energy analyst at the Paris-based IEA. Despite the drop, global coal consumption is likely to rise over the coming years, driven by demand in India, China and Southeast Asia. Power generation from coal rose almost 2% in 2018 to reach an all-time high, remaining the world’s largest source of electricity. The steady outlook for coal comes in spite of waning demand in industrialised nations. Europe has set a goal of zeroing out carbon pollution by the middle of the century, which would mean drastic reductions for coal. In the US, competition from natural gas has cut into demand for coal, despite President Donald Trump’s vows to revive the industry. The story is diff erent in Asia, which will more than make up for reductions elsewhere. India, with a population of more than 1.3bn, will see coal generation increase by 4.6% a year through 2024 to help power its growing economy. In Southeast Asia, coal demand will grow more than 5% annually. China, which accounts for almost half the world’s consumption, will also have modest growth with usage peaking in 2022. “How we address this issue in Asia is critical for the long-term success of any global eff orts to reduce emissions,” Fatih Birol, the IEA’s executive director, wrote in a foreword to the report. Any new coal plants added to meet the growing power demand in these countries will likely be in use for decades. Even as China’s coal consumption slows and then declines after 2022, emissions from the fuel would need to rapidly decline in order to meet climate targets. Under current policies, the world is set to warm almost 3 degrees Celsius (5.4 degrees Fahrenheit) by the end of the century. That’s double the rate scientists say is needed to constrain the worst impacts of climate change. To prevent those increases, it would be necessary to use technology that captures and stores carbon as it’s emitted from power plants, the IEA said. While the technology is expensive and untested at scale. But with coal here to stay, it may be the only option to reduce emissions.