US rejoins Paris climate accord with warning: this year’s talks are ‘last, best hope’

The US has marked its return to the Paris agreement by urging countries to do more to confront the climate crisis, with America’s climate envoy, John Kerry, warning that international talks this year are the “last, best hope” of avoiding catastrophic global heating.

On Friday, the US officially returned to the Paris climate accord, 107 days after it left at the behest of former president Donald Trump. Joe Biden moved to reverse this on his first day in office and Kerry conceded that the US is returning “with a lot of humility, for the agony of the last four years”.

“This is a significant day, a day that never had to happen,” Kerry said to Al Gore, the former US vice-president, in a conversation filmed on the eve of the re-entry. “It’s so sad that our previous president without any scientific basis or any legitimate economic rationale decided to pull America out. It hurt us and it hurt the world.”

The contrition of the Biden administration is, however, balanced by a desire to resume the mantle of leadership at a time when almost every country is struggling to undertake the swift emissions cuts required to avert disastrous global heating of 1.5C above the pre-industrial era, as outlined in the Paris deal.

Kerry said that none of the world’s major emitters, including China, India and the EU, are doing enough and that key UN climate talks later this year in Glasgow, Scotland, provide the “last, best hope we have” to get the world on track to avoid runaway climate change.

“The meeting in Glasgow rises in its importance,” said Kerry, a former US secretary of state. “We are at this most critical moment where we have the capacity to define the decade of the 20s which will make or break us to get to net zero carbon in 2050.” Kerry said that countries will have to “define in real terms their roadmap for the next 10 years, the next 30 years. We are talking about a reality we haven’t been able to assemble in these meetings so far.”

Kerry said that coal use needs to be phased out far more quickly, coupled with a rapid escalation of electric vehicles and renewable energy, and that he hoped to “build some new coalitions and approach this in a new way”. The US climate envoy said he had reached out to the pro-fossil fuel leaderships in Brazil and Australia, which have “had some differences with us, we’ve not been able to get on the same page completely”.

“For the last four years there were a lot of times when a lot of us thought the failure of this enterprise may rest on one word: Trump,” Kerry said in an event on Friday to mark the Paris re-entry. “But the international climate regime is still standing.”

While emissions worldwide from factories, airplanes and cars dipped sharply last year due to pandemic-related lockdowns, there are already signs of a roaring comeback that risks blowing past the agreed temperature limits and unleash worsening heatwaves, flooding, storms and societal unrest. The narrowing window of time to avoid climate breakdown means there is only brief cheering over the return of the US, the world’s second largest emitter of greenhouse gases.

“It’s good to have the US back in the Paris agreement, but sadly we have no time to celebrate,” said Laurence Tubiana, France’s climate change ambassador and a key architect of the Paris agreement. “The climate crisis is deepening and this is the year we need all major polluters to step up and deliver stronger plans to deliver a safe, clean and prosperous future for everyone.”

The US will release a new emissions cut pledge ahead of a 22 April summit convened by Biden with other major emitting countries and Tubiana said this goal should be “at least” a 50% reduction in greenhouse gases by 2030, from 2005 levels. The US, under Barack Obama, promised a 26% cut by 2025 and got about halfway to this target before the Covid-19 outbreak.

A coalition of nearly 200 environmental and humanitarian groups have urged the Biden administration to move well beyond the largely symbolic act of rejoining the Paris agreement by contributing billions of dollars to help defend poorer countries vulnerable to climate impacts and “lead with actions rather than just words”.

“The climate crisis is a race against time, and the US is just reaching the starting line after years of inaction,” said Jean Su, energy justice director at the Center for Biological Diversity. “As the world’s largest historical polluter, the United States must take its fair share of robust climate action on both the domestic and global stage.”




Germany’s Empty Pipeline Logic

Although the Nord Stream 2 gas pipeline is only 100 miles from completion, the transformation of world energy markets since construction began implies that the project no longer makes economic sense. So why is German Chancellor Angela Merkel determined to see it through to the end?

HAMBURG – Nord Stream 2, the almost-finished pipeline running directly from Russia to Germany, is not really about securing cheap natural gas. It is about personal gain and these two countries’ national interest.

The pipeline across the Baltic has pitted the United States and the European Union against Germany, and a swelling chorus of domestic critics against Chancellor Angela Merkel. If it were just a matter of gas molecules, the project might never have seen the light of day. So, why did it?

Go back to 2005, when Gerhard Schröder and Russian President Vladimir Putin sealed the deal just before Schröder stepped down as chancellor. Shortly after handing power over to Merkel, the Russian energy giant Gazprom, essentially a Kremlin affiliate, named Schröder chairman of Nord Stream AG’s shareholders committee. In 2016, Schröder rose to the top of Nord Stream 2, with Gazprom the only shareholder.

Ever since, Schröder has been Putin’s tireless point man. Schöder never tires of repeating that he did it for the good of Germany, because it locked in energy security at decent prices.

In fact, Germany and Western Europe do not need Nord Stream 2. The oil price has more than halved since its 2008 peak. And with ever more new gas fields coming onstream, especially in the Mediterranean, not to mention North America, the price of gas has dropped by almost four-fifths over this period. Nor is the gas glut likely to be temporary, given ever more renewables surging into the market.

There are already 13 pipelines running from Russia to Europe, delivering some 250 billion cubic meters (m3) of gas. Nord Stream 2 will raise dependence on Russia, but much more is at stake, because the pipeline circumvents Ukraine and Poland. For Putin, Ukraine, a former Soviet republic, rightfully belongs to the rodina, the Motherland, and he has already grabbed two pieces: Crimea and the Donbas. Likewise, he believes that Poland, a former satrapy, should be part of Russia’s sphere of influence.

Nord Stream 2 enables Putin to weaken both countries by depriving them of transit fees and breaking Ukraine’s grip on the tap. In 2020, Ukraine earned $3 billion in fees from transporting some 50 billion m3 of gas. Nord Stream 2 could pump about the same amount of gas – a neat coincidence. Schröder’s Gazprom gambit would enable Putin to apply the screws to Ukraine (and Poland), at a time when the government in Kyiv is desperately trying to resist Russian pressure on Ukraine’s already-weak economy.

Schröder was not really thinking of Germany or Europe when he got his friend Putin to top up his modest chancellor’s pension of €93,000 ($113,000) per year. The real puzzle is Merkel. When former US President Donald Trump told her, “You’ve got to stop buying gas from Putin,” she did not budge. An unnamed German official vowed: “We will do anything it takes to complete this pipeline.”

Presumably, energy supplies are not uppermost in Merkel’s mind. This is not about the “low politics” of gas and cash, but the “high politics” of states seeking power and position. Regardless of how often Germans and Russians have been at each other’s throats, the enduring reflex goes back to Bismarck, who famously told the country in the middle: “Never cut the link to St. Petersburg.” In other words, keep the peace with the giant on Germany’s eastern flank.

Though now sheltered by NATO, the Federal Republic has been honoring Bismarck by practicing propitiation, or at least benevolent neutrality. With her fine sense for power, Merkel is not swooning over Russian gas, but sticking to a classic rule of German diplomacy.

Even during the Cold War, West Germany defied three American presidents – Nixon, Carter, and Reagan – by bartering steel pipes for Soviet energy. But what might have made economic sense during the global oil shocks of the 1970s now reflects only Bismarck’s admonition: Don’t rile the Russians.

Today, however, Merkel is acting on a new stage, and not only because of oversupply and dwindling demand as the industrial world shifts to solar, wind, and higher efficiency. Suddenly, Merkel is “home alone.” It is not just the US, Britain, and nervous East Europeans who want to reduce Nord Stream 2 to scrap. Even the French are turning against the deal.

Reliant on nuclear power, France doesn’t need Russian gas. It worries more about Germany’s “special relationship” and Russia’s lengthening shadow over Europe. Just this month, Russian foreign minister Sergey Lavrov threatened to rupture relations with the EU if it imposed new sanctions.

In addition, Merkel faces unprecedented headwinds on her own turf. Even prominent fellow Christian Democrats and the pacifist-minded Greens have turned against Putin. So have parts of the liberal media, which usually zeroes in on imperial America.

Why? Two words: Alexei Navalny. Facing his most dangerous rival yet, Putin has overplayed his hand. The Kremlin’s attempted murder of Navalny, and now the longish prison sentence meted out to him, has rattled Germany’s political class. In democracies, moral revulsion beats Merkel-style realpolitik.

The wheeling and dealing has already begun. Germany is dangling some juicy carrots before Biden, promising to raise subsidies for the construction of German liquefied natural gas terminals that will take in American LNG. Germany also vows to work hard on new rules that would ensure the continued transit of gas through Ukraine. Poland will get funds for LNG terminals. There is talk that Germany would shut off Nord Stream 2 if Russia violated international law and human rights. Please, President Biden, just lift the sanctions.

A deal will be struck. But who will “negotiate” with the energy market? The court of supply and demand may issue this definitive verdict: no need for another pipeline. If so, Nord Stream 2 may just rot away underneath the Baltic – a monument to greed and folly.




Texas’ Gas-Export Clampdown Shocks Market as Blackouts Ebb

Texas is restricting the flow of natural gas across state lines in an extraordinary move that some are calling a violation of the U.S. Constitution’s commerce clause.

Texas Governor Greg Abbott on Wednesday told a media briefing that he was banning gas from leaving the state through Feb. 21 to ensure in-state power generators had ample supplies. Less than 24 hours later, Texas’s top energy regulator told gas producers to offer supplies for sale in-state before shipping it elsewhere, citing the governor’s mandate.

Under the Constitution’s so-called commerce clause, state governments are prohibited from interfering in interstate trade. Abbott said a disaster declaration he issued on Feb. 12 gave him latitude to impose such restrictions.

Abbott said he was forced to act as millions of Texans remain without power. By late Thursday morning, the number of blacked-out customers was down to about 500,000 from more than 4 million two days earlier, according to PowerOutage.us. Meanwhile, gas prices at a key trading hub in Oklahoma slumped 99% in a sign that the worst of the gas squeeze may be over. Still, the timeline to a full restoration of power is unclear.

“Operators should take notice that under this mandate, all ‘sourced natural gas’ be made available for sale to local power generation opportunities before leaving the state of Texas, effective through February 21, 2021,” the railroad commission said in its directive to drillers.

‘Maximum Withdrawal’

Abbott’s announcement caught some gas traders flatfooted and sowed confusion in a market already dealing with huge upheaval. One West Coast-based trader said he lost $1 million within minutes. Without being able to read the order, others hurriedly sought answers: Can gas still be exported to Mexico? Is LNG affected?

Benchmark U.S. gas futures fell 3.7% to $3.101 per million Britsh thermal units at 1:07 p.m. on the New York Mercantile Exchange after rising as much as 2.5% in overnight trading.

Supply for next-day delivery at the Oneok Gas Transportation hub in Oklahoma traded at $4 per million British thermal units on Thursday, according to traders. That’s down from $1,250 on the previous day and in line with prices seen just over a week ago. The Oneok hub is a key transit point for gas headed for major population centers such as Chicago.

“This is an abuse of the Texas Disaster Act,” said Jared Woodfill, a prominent Republican attorney who repeatedly challenged Abbott over coronavirus restrictions in 2020. “It’s amazing that there are no limits in Abbott’s mind to what his authority is under the Texas Disaster Act. He’ll take as much power as the courts and the Legislature will let him have.”

The crumbling of the state’s gas supplies as Arctic temperatures took hold at the start of the week has been one of the driving factors behind the cascade of outages.

The calamity unfolding across Texas is somewhat reminiscent of the California power crisis of 2000-2001 when energy suppliers withheld and redirected electricity and gas out of state even as it faced shortfalls, prompting lawsuits. And yet again, even as Californians endured rolling blackouts amid an extreme heat wave last year, energy suppliers were exporting power to neighboring states. The state’s grid operator later blamed market-design flaws.

Dan Woodfin, an executive at Ercot, said in an interview that a lack of gas supply is one of the reasons why it’s having trouble getting power plants back online.

Fossil Fuels

One railroad commissioner took an emergency meeting on Wednesday as an opportunity to slam windmills and solar arrays that have become a bigger and bigger part of Texas’s energy mix.

The state’s gas stockpiles are undergoing “maximum withdrawal,” Christi Craddick, the commission’s chairman, said at a Wednesday media briefing with the governor and other state officials. She added that some gas plants in South and West Texas are resuming operation amid a thaw.

Top State

Texas produces more gas than any other state, with output at about 23 billion cubic feet a day before the deep freeze, BloombergNEF data show. That’s about a quarter of total production from the Lower 48 states. Its two liquefied natural gas export terminals consumed about 4 billion cubic feet a day of gas before the polar blast.

Abbott asked the Freeport LNG export terminal earlier in the week to dial back its operations. Freeport said it was shutting down two LNG production units in response. Gas flows to all U.S. LNG export terminals fell to a 2-year low on Tuesday.

Texas also exports gas by pipeline to Mexico. Gas is flowing again via the Nueva Era conduit between the two nations after the extreme cold interrupted its operation earlier in the week, according to one of the pipeline’s owners.

Abbott also said Wednesday he and other state governors had expressed concern on a conference call with President Joe Biden about the severe spikes in natural gas prices amid the crisis. Spot prices in neighboring Oklahoma rocketed to over $1,000 per million British thermal units Wednesday, increasing more than 100-fold from a week earlier.




La présidence de Biden offre de « nouvelles opportunités » pour débloquer le gaz de la Méditerranée de l’Est

Athènes, Grèce : Le monde post-Covid aura toujours besoin de gaz naturel de la Méditerranée de l’Est et le nouveau président de l’Amérique pourrait avoir les bonnes références pour surmonter les obstacles diplomatiques, c’est ce qu’un vétéran de la scène énergétique régionale a déclaré mercredi lors d’une conférence à Athènes.

Roudi BAROUDI, PDG d’Energy and Environment Holding, un cabinet de conseil indépendant basé au Qatar, a déclaré, le premier jour des Dialogues d’Athènes sur l’énergie, que Biden avait plusieurs qualités qui pourraient lui permettre de briser l’impasse.

Baroudi a déclaré dans les remarques transmises par un lien vidéo que « dans le passé, Biden a démontré une compréhension considérable des problèmes affectant la Méditerranée de l’Est ainsi qu’une perspective qui met en faveur des solutions juridiques et diplomatiques ».

En outre, il a déclaré à un public comprenant des personnalités clés de l’énergie, des finances et du gouvernement que le nouveau président « a déjà exprimé sa détermination à réaffirmer certaines des prérogatives clés de Washington sur la scène internationale. Il s’agit notamment de son rôle stabilisateur traditionnel en Méditerranée, ainsi que sa défense du NATO, qui se trouve inclure à la fois la Grèce et la Turquie, après quatre ans où Donald Trump a sapé l’alliance à chaque occasion ».

Les récentes découvertes du pétrole et du gaz offshore ont ramené les tensions gréco-turques mijotant depuis longtemps au premier plan, Ankara devenant beaucoup plus affirmée quant à ses revendications maritimes, en particulier lorsque celles-ci se chevauchent avec celles de la Grèce et de Chypre.

BAROUDI, qui pendant des années a défendu la coopération dans le domaine de l’énergie comme un moyen d’apaiser les tensions entre plusieurs pays de la Méditerranée de l’est, a récemment écrit un livre sur la façon de régler les revendications concurrentes dans la région. Plus précisément, les « différends maritimes en Méditerranée de l’Est: la voie à suivre examine les outils et modèles définis dans la Convention des Nations Unies sur le Droit de la Mer (UNCLOS).

Il a déclaré à l’auditoire que l’UNCLOS « fournit tous les outils et bases procédurales pour la résolution pacifique » des revendications rivales.

BAROUDI ajouta : « La résurrection par Biden d’une politique étrangère américaine plus conventionnelle signifie de nouvelles opportunités pour la Grèce, la Turquie et d’autres pays de la région pour tracer un avenir plus coopératif et plus productif ». « Les prix dans cette tentative comprennent non seulement une réduction des tensions et une facilitation de milliards de dollars de ventes et d’économies d’énergie, mais aussi un élément crucial de la transition de la région vers un avenir à plus faibles émissions de carbone ».

Avec plus de 40 ans d’expérience dans le secteur de l’énergie, BAROUDI a contribué à façonner les choix politiques et d’investissement pour les entreprises, les gouvernements, les investisseurs et les organisations supranationales comme l’ONU et l’Union européenne. Il a expliqué aux journalistes après son discours que cela a également un “rôle clé dans le maintien des tensions ».

 




Ομιλία κ. Roudi Baroudi, Athens Energy Forum 2021

H προεδρία Μπάιντεν προσφέρει «νέες ευκαιρίες» να ξεκλειδώσει το φυσικό αέριο στην Ανατολική Μεσόγειο.

Aθήνα, Ελλάδα : «Ο κόσμος στην μετά Covid εποχή θα εξακολουθεί να χρειάζεται φυσικό αέριο από την Ανατολική Μεσόγειο και ο νέος πρόεδρος των ΗΠΑ ίσως να έχει τα κατάλληλα διαπιστευτήρια ώστε να προσπεράσει τα διπλωματικά εμπόδια» ένας βετεράνος της περιφερειακής ενεργειακής σκηνής δήλωσε σε συνέδριο στην Αθήνα την Τετάρτη.

Ο Ρούντι Μπαρούντι, Διευθύνων Σύμβουλος της Energy and Environment Holding, μια ανεξάρτητης συμβουλευτικής εταιρείας με έδρα το Κατάρ δήλωσε την πρώτη μέρα του συνεδρίου Athens Energy Dialogues, ότι ο Μπαιντεν έχει πολλές ικανότητες που θα μπορούσαν να του επιτρέψουν να λύσει τον γόρδιο δεσμό.

«Ο Μπαιντεν στο παρελθόν έχει επιδείξει αξιοπρόσεκτη κατανόηση σε θέματα που αφορούν την Ανατολική Μεσόγειο , καθώς επίσης σε μια προοπτική που δίνει έμφαση σε νομικές και διπλωματικές λύσεις» τόνισε ο κ. Μπαρούντι στην διαδικτυακή τοποθέτησή του.

Επιπλέον, υπογράμμισε, σε ένα κοινό που αποτελούνταν από εκπροσώπους της κυβέρνησης, του ενεργειακού και του επιχειρηματικού τομέα, ο νέος πρόεδρος έχει ήδη διατυπώσει την αποφασιστικότητα να επαναβεβαιώσει ορισμένα από τα βασικά προνόμια της Ουάσιγνκτον στη διεθνή σκηνή. Σε αυτά περιλαμβάνεται ο παραδοσιακός σταθεροποιητικός της ρόλος στη Μεσόγειο καθώς επίσης και η υπεράσπιση του ΝΑΤΟ ,  μέλη του οποίου η Ελλάδα και η Τουρκία και ενώ τα τελευταία τέσσερα χρόνια η διακυβέρνηση του Ντόλαντ Τραμπ υπονόμευσε τη συμμαχία με κάθε ευκαιρία.

Πρόσφατες ανακαλύψεις off shore πετρελαίου και φυσικού αερίου έφεραν τις ανοιχτές επι δεκαετίες ελληνοτουρκικές εντάσεις πάλι στο προσκήνιο, με την Αγκυρα να γίνεται περισσότερο αποφασιστική στους ισχυρισμούς της επι των θαλασσίων ζωνών ιδιαίτερα σε αυτές που έχει αντιπαράθεση  με την Ελλάδα και την Κύπρο.

Ο κ. Μπαρούντι ο οποίος επι  χρόνια έχει πρωταγωνιστήσει στη συνεργασία επί των θεμάτων ενέργειας, , έγραψε πρόσφατα ένα βιβλίο  για τους συμβιβασμούς που απαιτούνται μεταξύ των ανταγωνιστικών ισχυρισμών στην περιοχή ως ένας τρόπος να οδηγήσει στην αποκλιμάκωση της έντασης μεταξύ των χωρών της Ανατολικής Μεσογείου. Συγκεκριμένα στο βιβλίο του με τίτλο «Διαφορές επι των θαλάσσιων θεμάτων στην Ανατολική Μεσόγειο: Ο τρόπος να πάμε μπροστά» εξετάζει τα εργαλεία και οι ευκαιρίες που απορρέουν από τη Σύμβαση για το Δίκαιο της θάλασσας των Ηνωμένων Εθνών ( UNCLOS)

H σύμβαση, είπε στο ακροατήριο, παρέχει όλα τα εργαλεία και τις διαδικαστικές βάσεις για την ειρηνική επίλυση των αντιμαχόμενων ισχυρισμών.

Η ενεργοποίηση του Μπαιντεν σε μια πιο συμβατική εξωτερική πολιτική των ΗΠΑ σημαίνει νέες ευκαιρίες για την Ελλάδα, την Τουρκία και άλλες χώρες της περιοχής να σχεδιάσουν ένα πιο συνεργάσιμο και παραγωγικό μέλλον, πρόσθεσε ο κ. Μπαρούντι.

Τα κέρδη σε αυτή την προσπάθεια περιλαμβάνουν όχι μόνο τη μείωση των εντάσεων και τη διευκόλυνση των πωλήσεων ενέργειας αξίας δισεκατομμυρίων δολαρίων αλλά θα αποτελέσει ένα σημαντικό παράγοντα στη μεταβίβαση της περιοχής σε ένα μέλλον με χαμηλότερες εκπομπές διοξειδίου του άνθρακα.

Με περισσότερα από 40 χρόνια εμπειρίας στη βιομηχανία της ενέργειας, ο κ. Μπαρούντι έχει βοηθήσει στη διαμόρφωση πολιτικών και επενδυτικών επιλογών για εταιρείες, κυβερνήσεις, επενδυτές και διεθνείς οργανισμούς όπως ο ΟΗΕ και η Ευρωπαική Ενωση. Η τελευταία, όπως εξήγησε στους δημοσιογράφους μετά την ομιλία του, παιζει ένα σημαντικό ρόλο στο να κρατά τις εντάσεις χαμηλά.

 




BIDEN PRESIDENCY OFFERS ‘NEW OPPORTUNITIES’ TO UNLOCK EAST MED GAS

ATHENS, Greece: The post-COVID world will still need natural gas from the Eastern Mediterranean, and America’s new president may have just the right credentials to overcome diplomatic obstacles, a veteran of the regional energy scene told a conference in Athens on
Wednesday.

Roudi Baroudi, CEO of Energy and Environment Holding, an independent consultancy based in Qatar, told the first day of the Athens Energy Dialogues that Biden had several qualities that might enable him to break up the logjam.

“Biden in the past has demonstrated considerable understanding of issues affecting the Eastern Med, as well as a perspective that emphasizes legal and diplomatic solutions,” Baroudi said in remarks delivered by video link. In addition, he told an audience including key energy, finance, and government figures, the new president “has already articulated a determination to reassert some of Washington’s key prerogatives on the international stage. These include its traditional stabilizing role in the Mediterranean, as well as its championing of NATO, which happens to include both Greece and Turkey, after four years of Donald Trump undermining the alliance at every opportunity.”

Recent discoveries of offshore oil and gas have brought long-simmering Greco-Turkish tensions back to the front burner, with Ankara becoming much more assertive about its maritime claims, especially where these overlap with those of Greece and Cyprus.
Baroudi, who for years has championed cooperation in energy as a way of defusing tensions among several East Med countries, has recently written a book about how to settle competing claims in the region. Specifically, ‘Maritime Disputes in the Eastern Mediterranean:
The Way Forward’ examines the tools and templates laid down in the United Nations Convention on the Law of the Sea (UNCLOS).

UNCLOS, he told the audience, “provides all the tools and procedural bases for the peaceful resolution” of rival claims. “Biden’s resurrection of a more conventional US foreign policy means new opportunities for Greece, Turkey, and other countries in the region
to chart out a more cooperative and more productive future,” Baroudi added. “The prizes in this endeavor include not just a reduction of tensions and the facilitation of billions of dollars worth of energy sales and savings, but also a crucial component of the region’s transition
to a lower-carbon future.”

With more than 40 years of experience in the energy industry, Baroudi has helped shape policy and investment choices for companies, governments, investors, and supranational organizations like the UN and the European Union. The latter, he explained to reporters after his
talk, also has a “key part in keeping the tensions down”.




Global Oil Markets Are Now Balanced, Russia’s Novak Says

(Bloomberg) — Global oil markets have rebalanced following last year’s historic collapse in demand, according to Russia’s deputy prime minister.

“The last few months we have seen low volatility, which means the market is balanced, and the prices we see today certainly correspond to the situation in the market,” Alexander Novak said on state television channel Rossiya 1 on Sunday. Crude will probably average $45 to $60 a barrel this year, according to Novak, who was Russian energy minister before President Vladimir Putin promoted him in November.

Benchmark Brent crude has surged 22% this year to top $63 a barrel as energy use recovers in the U.S. and China and nations roll out coronavirus vaccines. Prices have also been buoyed by deep supply cuts from the Organization of Petroleum Exporting Countries and its partners, who are trying to clear surplus stockpiles built up during the pandemic.

The oil market “has partially recovered, but not completely yet,” Novak said, adding that global demand was about 8% to 9% below pre-pandemic levels by the end of last year, compared with a decline of 20% to 25% in April and May.

Most members of the OPEC+ coalition, which has been gradually restoring barrels halted during the crisis, are pausing the process for two months. But Russia secured a 65,000-barrel-a-day increase in its quota for February and March, while Saudi Arabia is implementing a unilateral cut of 1 million barrels a day. OPEC+ ministers will meet in early March to discuss next steps.

Novak also commented on the Nord Stream 2 project, a natural gas pipeline being built under the Baltic Sea from Russia to the German coast. Despite U.S. sanctions targeting the project, it will be completed, Novak said. Work on the line resumed in late 2020 after being halted for a year.

(Updates with further Novak comment in fourth paragraph.)

For more articles like this, please visit us at bloomberg.com




US oil demand is emerging after months of Covid paralysis

Bloomberg / New York

US oil demand is finally starting to emerge from the grips of pandemic after months with Asia serving as the lone bright spot in the global market market.
American refiners are processing the most crude since the economy ground to a halt in March in anticipation of a vaccine-driven boost in gasoline demand this summer. The uptick means that the refiners are competing for domestic barrels that for months were sent to more robust markets in Asia. Prices for cargoes of grades like West Texas Intermediate crude have picked up by at least 50 cents a barrel from earlier this month.
The return of US demand, which began when a global vaccination campaign kicked off in December, is the latest development in oil’s recovery from the depths of the pandemic. For months oil prices were managed by Opec and its partners with production cuts, without the help of demand outside of Asia.
As domestic oil demand recovers, it could meet with supply shortages. Economic-driven output declines took about 2mn barrels a day of local crude off the market from the peak of 13.1mn, after dozens of drillers slashed budgets and filed for bankruptcy. The US government sees production recovering to only 11.5mn barrels a day in 2022.




Rosneft Returns to Profit, Signaling 2020 Dividend Payments

Russian oil giant Rosneft PJSC returned to profit in the fourth quarter of 2020 after signing a multibillion dollar deal to sell a share of its Vostok Oil mega-project in the Arctic to trader Trafigura Group.

The results signal that the producer will be able to pay a dividend for 2020 even after historic crude-price declines and production cuts. The company reported a record quarterly net income of 324 billion rubles ($4.36 billion) in the three months through December, above analyst estimates. That offset earlier losses, resulting in a full-year profit of 147 billion rubles.

“Despite all the difficulties of 2020, the company has achieved a net income, which will be the basis for the distribution of dividends,” Chief Executive Officer Igor Sechin said in a statement on Friday. Rosneft’s management will recommend the board to make 2020 payouts to shareholders fully in line with the company’s dividend policy, First Vice-President Didier Casimiro said on a call with investors.

Big Oil has mostly reported disappointing fourth-quarter earnings, signaling the industry’s recovery from the pandemic will be long. While most international producers, such as Royal Dutch Shell Plc or Exxon Mobil Corp., remain committed to making or even raising dividend payouts, investors question just how soon the sector will be able to improve its cash flow.

Russian oil companies have been under even more pressure due to output constraints that are part of the country’s deal with the Organization of Petroleum of Exporting Countries. Accounting for 40% of the nation’s total crude production, Rosneft bears the biggest burden.

Based on its full-year results, the producer, which distributes a half of its net income to shareholders, is set to pay some 7 rubles per share in 2020, according to estimates from BCS Global Markets and Sova Capital. That would be Rosneft’s smallest shareholder payout since 2016. The company scrapped its interim dividend for 2020 after losing money in the first half of the year.

Rosneft shares advanced as much as 1.1% to 506.50 rubles, the highest level in more than three weeks.

Arctic Foray

Rosneft expects Vostok Oil, an ambitious Arctic development valued at $85 billion, to drive future dividend yields and shareholder value, Sechin said.

Rosneft received 7 billion euros from Trafigura for 10% of Vostok Oil in December, according to the financial statement. The deal allowed “for the practical start of the execution of the project,” Sechin said.

The Vostok project envisions production of some 25 million tons of oil per year, or around 500,000 barrels a day, in 2024, and twice as much in 2027. At its peak, the remote development is set to produce as much as 100 million tons per year. That compares with Russia’s total crude oil and condensate production of 513 million tons for 2020.

Rosneft is in discussions with other potential partners in Vostok Oil, Casimiro said, adding that international trading houses, global oil majors and crude-importing nations like India are interested. Russia will keep a controlling stake in the development, he said.




Total quits US oil lobby over climate policies

Reuters /London

Total yesterday became the first major energy company to quit the main US oil and gas lobby due to disagreements over its climate policies and support for easing drilling regulations.
Total said it would not renew its 2021 membership with the American Petroleum Institute (API) following a review of the lobby’s climate positions, describing them as being only “partially aligned” with Total’s.
Its withdrawal from the century-old API comes ahead of a sweeping change in policy direction in the United States, with incoming President Joe Biden promising to tackle climate change and bring the country to net-zero emissions by 2050.
The points of difference include API’s support for the rollback of US regulation on emissions of methane, a potent greenhouse gas, for oil and gas drillers as well as on how to assign a price to carbon, seen as a critical method to curb emissions.
“As part of our Climate Ambition made public in May 2020, we are committed to ensuring, in a transparent manner, that the industry associations of which we are a member adopt positions and messages that are aligned with those of the Group in the fight against climate change”, Total chief executive Patrick Pouyanné said.
In a statement, the API thanked Total for its membership.
“We believe that the world’s energy and environmental challenges are large enough that many different approaches are necessary to solve them, and we benefit from a diversity of views,” the API said.
Total’s operations in the United States include a number of offshore oil and gas fields in the Gulf of Mexico, a major refining and petrochemical plant in Port Arthur, Texas as well as renewable energy businesses.
Total last year announced plans to cut its carbon emissions, with the aim of reaching net zero emissions from its operations and its energy products sold to customers in Europe by 2050 or sooner.
Europe’s top energy companies, including BP and Royal Dutch Shell, have outlined plans to curb emissions and boost renewable energy output following years of growing investor pressure.
Total, BP and Shell have already pulled out of the American Fuel & Petrochemical Manufacturers, a US oil refining group, also due to differences over climate policies.
They also said they would regularly review their alignment over climate with industry associations but until Friday those companies had elected to remain in API, the primary trade group for the oil and gas industry.
BP last year decided to remain in the API even though it was only partially aligned with the lobby.
Andrew Logan, director for oil and gas programmes and clean energy investor group CERES, said the announcement was significant and would put pressure on other European oil majors.
“Given the size and influence of API, this is a much more significant move than previous decisions to pull out of more niche trade groups like AFPM.
I think that we will see other companies follow suit,” Logan said.