BRUSSELS, Dec 19 (Reuters) – European Union energy ministers on Monday agreed a gas price cap, after weeks of talks on the emergency measure that has split opinion across the bloc as it seeks to tame the energy crisis.

The cap is the 27-country EU’s latest attempt to lower gas prices that have pushed energy bills higher and driven record-high inflation this year after Russia cut off most of its gas deliveries to Europe.

Ministers agreed to trigger a cap if prices exceed 180 euros ($191.11) per megawatt hour for three days on the Dutch Title Transfer Facility (TTF) gas hub’s front-month contract, which serves as the European benchmark.

The TTF price must also be 35 eur/MWh higher than a reference price based on existing liquefied natural gas (LNG) price assessments for three days.

“We have succeeded in finding an important agreement that will shield citizens from skyrocketing energy prices,” said Jozef Sikela, industry minister for the Czech Republic, which holds the rotating EU presidency.

The cap can be triggered starting from Feb. 15, 2023. The deal will be formally approved by countries in writing, after which it can enter into force.

Once triggered, trades would not be permitted on the front-month, three-month and front-year TTF contracts at a price more than 35 euros/MWh above the reference LNG price.

This effectively caps the price at which gas can be traded, while allowing the capped level to fluctuate alongside global LNG prices – a system designed to ensure EU countries can still bid at competitive prices for gas in from global markets.

Germany voted to support the deal, despite having raised concerns about the policy’s impact on Europe’s ability to attract gas supplies in price-competitive global markets, three EU officials said.

An EU official told Reuters Germany agreed to the price cap after countries agreed changes to another regulation on speeding up renewable energy permits, and stronger safeguards were added to the cap.

Those safeguards include that the cap will be suspended if the EU faces a gas supply shortage, or if the cap causes a drop in TTF trading, a jump in gas use or a significant increase in gas market participants’ margin calls.

Soaring power and gas prices have rocked energy companies across Europe, forcing utilities and traders to secure extra funds from governments and banks to cover margin call requirements.

Germany’s Uniper (UN01.DE) has booked billions of euros of losses on derivatives, exacerbating a crisis as it rushed to fill the gap left after Russia cut supplies.

Jacob Mandel, senior associate at Aurora Energy Research, said the TTF front-month contract has rarely closed above 180 eur/MWh, noting this has occurred on 64 days in its history. All of those were in 2022.

Two EU officials said only Hungary voted against the price cap.

The Netherlands and Austria abstained. Both had resisted the cap during negotiations, fearing it could disrupt Europe’s energy markets and compromise Europe’s energy security.

Dutch energy minister Rob Jetten said: “Despite progress the last couple of weeks, the market correction mechanism remains potentially unsafe.”

“I remain worried about major disruptions on the European energy market, about the financial implications and, most of all, I am worried about European security of supply,” he added.

The EU proposal has also drawn opposition from some market participants, who have said it could cause financial instability.

The Intercontinental Exchange (ICE) (ICE.N), which hosts TTF trading on its Amsterdam exchange, last week said it could move TTF trading to outside of the EU if the bloc capped prices.

On Monday, it said it will assess whether it can continue to operate fair and orderly markets for TTF gas hub trading. For now, ICE TTF markets will continue trading as normal.

The front month TTF gas price closed trading on Monday 9% lower, at 107 euros/MWh, Refinitiv Eikon data showed.

The contract hit a record high of 343 euros in August – a price spike that prompted the EU to move ahead with its price cap.

Italy’s energy authority ARERA expects further increases in gas prices as the winter season kicks in, its President Stefano Besseghini said on Monday.

Meanwhile, Russia’s Kremlin spokesman Dmitry Peskov said the cap was an attack on market pricing, and unacceptable, Russia’s Interfax news agency reported.

The deal follows months of debate on the idea and two previous emergency meetings that failed to clinch an agreement among EU countries that disagreed on whether a price cap would help or hinder Europe’s attempts to contain the energy crisis.

Roughly 15 countries, including Belgium, Greece and Poland, had demanded a cap below 200 euros/MWh – far lower than the 275 euros/MWh trigger limit originally proposed by the European Commission last month.

Poland’s prime minister said the price cap would end Russia and Gazprom’s ability to distort the market.

“At the recent meetings in Brussels, our majority coalition managed to break the resistance – mainly from Germany,” Mateusz Morawiecki wrote on Twitter. “This means the end of market manipulation by Russia and its company Gazprom.”

Big Oil’s record profits are a huge hit on Wall Street but increasingly provocative in the corridors of power from Washington to London as politicians lash out against executives for funnelling windfall profits to investors.
The controversy this week was not so much about the gargantuan dollar amounts earned but what the world’s largest energy companies chose to do with them. Exxon Mobil Corp, Chevron Corp, Shell Plc and TotalEnergies SE are handing almost $100bn to shareholders annually in the form of buybacks and dividends while reinvesting just $80bn in their core businesses this year, according to data compiled by Bloomberg.
“Can’t believe I have to say this, but giving profits to shareholders is not the same as bringing prices down for American families,” President Joe Biden tweeted on Friday in response to Exxon’s dividend increase.
Biden assailed Exxon again Friday evening at a Democratic fundraiser in Philadelphia, saying the company’s earnings were “the most it’s made in its 152-year history, while the rest of America is struggling.”
“Those excess profits are going back to their shareholders and their executives instead of going to lower prices at the pump and giving relief to the American people, who deserve it and need it,” he added.
“I’m going to keep harping on it,” Biden vowed. “They talk about me picking on them – they ain’t seen nothing yet. I mean it. It outrages me. Representative Ro Khanna, a California Democrat, called energy profits “obscene,” and introduced legislation to prohibit fuel exports, a move he said would lower prices at the pump. Senate Majority Leader Chuck Schumer called the earnings “unconscionable.”
Russia’s post-invasion halt to natural gas shipments to much of Europe and sanctions on the country’s oil exports triggered a global scramble for energy supplies, bidding up prices in the process.
With gasoline prices and household utility bills squeezing consumers and pushing up inflation, politicians are demanding major oil companies reinvest more profits in drilling and refining to ease the strain.
For their part, oil executives, under pressure on emissions and years of poor returns, are in no mood to back down.
“There are hard times, as we saw just two years ago where we had enormous losses,” Chevron chief executive officer Mike Wirth said on Bloomberg TV. “You move into another part of the cycle and you have strong earnings. Good times don’t last just like the difficult times don’t last. We have to invest through those cycles.”
Wirth rejected the idea that current profits are a windfall and warned politicians against enacting any “short-sighted” policies that would restrain investment.
Earlier this year, the UK passed a windfall-profits tax on domestic oil and gas producers including BP Plc and Shell to claw back some of their extraordinary earnings, and there may be more measures on the way. Prime Minister Rishi Sunak says all options are on the table as he attempts to fill a £35bn ($40.7mn) budget shortfall.
The European Union also gave a green light earlier this year for countries to implement windfall levies. An analysis from Boston Consulting Group found that the measure could raise as much as 150bn euros ($149mn) in the next year. “There’s just a big gap in country finances and this is a way to fill that,” said Anders Porsborg-Smith, a managing director at BCG. “And it’s rarely unpopular to tax supernormal profits.”
California Governor Gavin Newsom, also a Democrat, said it’s time to “crack down on oil’s price gouging tactics and put their profits back into our pockets,” adding “gas prices shouldn’t be this high.” But analysts say California’s strict clean-fuel standards are a major reason why the state pays more for gasoline than any other in the US.
Windfall taxes may be popular but whether they’re effective is another matter. Shell hasn’t had to pay any windfall tax in the UK so far, despite making record-setting profits this year, due to increased investment in the North Sea. More importantly, the industry says such taxes risks chilling investment by the oil majors at a time when they’re most needed.
Exxon and Chevron are increasing oil and gas output fast in the Permian Basin, and both reported strong refining throughput in the third quarter, but there’s a limit to how much they can do to ease prices in the short-term. Major projects take years of planning and development. Bad policy is a factor behind today’s energy crisis, according to Exxon CEO Darren Woods.
“Unfortunately, the markets that we’re in today are a function of many of the policies, and some of the narrative that’s floated around in the past,” he said. “Our focus is really making sure people understand what the potential consequences of some of these policies are.”

TRIPOLI, Oct 3 (Reuters) – Libya’s Tripoli government signed a preliminary deal on energy exploration on Monday, prompting Greece and Egypt to say they would oppose any activity in disputed areas of the eastern Mediterranean.

Libya’s eastern-based parliament, which backs an alternative administration, also rejected the deal.

Speaking at a ceremony in Tripoli, Turkish Foreign Minister Mevlut Cavusoglu and Libyan Foreign Minister Najla Mangoush said the deal was one of several in a memorandum of understanding on economic issues aimed at benefiting both countries.

Oil giant Saudi Aramco’s chief on Tuesday blasted “unrealistic” energy transition plans, calling for a “new global energy consensus”, including ramped-up investments in fossil fuels to address painful shortages.
Speaking at a conference in Switzerland, Amin Nasser, head of the world’s biggest crude producer, lamented a “deep misunderstanding” of what caused the current energy crunch and said a “fear factor” was holding back “critical” long-term oil and gas projects.
“When you shame oil and gas investors, dismantle oil- and coal-fired power plants, fail to diversify energy supplies (especially gas), oppose LNG receiving terminals, and reject nuclear power, your transition plan had better be right,” he said.
“Instead, as this crisis has shown, the plan was just a chain of sandcastles that waves of reality have washed away.
“And billions around the world now face the energy access and cost of living consequences that are likely to be severe and prolonged.”
The primarily state-owned Saudi Aramco last month unveiled record profits of $48.4bn in the second quarter of 2022, after Russia’s invasion of Ukraine and a post-pandemic surge in demand sent crude prices soaring.
Yet even as it benefits from the current energy crisis, Riyadh has long complained that focusing on climate change at the expense of energy security would further fuel inflation and other economic woes.
With consumers and businesses in Europe facing soaring bills as winter approaches, the causes of the crisis run deeper than the Ukraine war, Nasser said Tuesday, asserting that the warning signs were “flashing red for almost a decade”. They include declining oil and gas investments dating back to 2014 and flawed models for how quickly the world could transition to renewable sources, he said.
The “energy transition plan has been undermined by unrealistic scenarios and flawed assumptions because they have been mistakenly perceived as facts”, Nasser said.
His proposed “new global energy consensus” would involve recognising long-term needs for oil and gas, enhancing energy efficiency and embracing “new, lower-carbon energy” to complement conventional sources. Nasser nonetheless said there should be no change in global climate goals.
Riyadh has come under intense outside pressure in recent months to ramp up oil production, including during a visit by US President Joe Biden in July.
So far it has largely rebuffed those appeals, co-ordinating with the Opec+ alliance it jointly leads with Russia.
Earlier this month the bloc agreed to cut production for the first time in more than a year as it seeks to lift prices that have tumbled due to recession fears.
Long-term, Saudi Arabia plans to increase daily oil production capacity by more than 1mn barrels to exceed 13mn by 2027.
Crown Prince Mohamed bin Salman has also tried to make environmentally friendly policies a centrepiece of his reform agenda.
Last year, Saudi Arabia pledged ahead of the COP26 climate change summit to achieve net zero carbon emissions by 2060.
Saudi Aramco, for its part, has pledged to achieve “operational net-zero” carbon emissions by 2050. That applies to emissions that are produced directly by Aramco’s industrial sites, but not the CO2 produced when clients burn Saudi oil in their cars, power plants and furnaces.

There is not much Qatar can do to alleviate Europe’s gas crisis in the short term due to contractual commitments, Qatari Energy Minister Saad al-Kaabi tells Energy Intelligence — but further out, in five to seven years, new Qatari LNG exports to Europe should be significant. In an exclusive interview, al-Kaabi said production from the Golden Pass LNG project in the US, where QatarEnergy partners with Exxon Mobil, is due on stream in 2024 and is “already earmarked for Europe.” Up to half of new output from Qatar’s 48 million ton per year North Field mega-expansion could also go West of Suez when it starts up from 2026. Al-Kaabi also serves as head of state-owned QatarEnergy, which is in active discussions with customers for the new supplies. Significantly, targeted contract durations are shorter than the 20-year deals seen in Qatar’s original LNG expansion, reflecting European reluctance to lock into gas supplies long-term. “I think 10-15-year deals are probably what are most acceptable to both sides. But for us, the long-term deal, it’s not just about duration, it’s about price,” he said. Even with such supplies, al-Kaabi expressed skepticism about Europe’s ability to completely wean itself off Russian gas. Europe will find it “very difficult” to completely forgo Russian pipeline gas for more than two winters. Despite storage, fuel switching and active efforts to expand LNG imports, “a quick fix” to the EU’s dependency on Russian gas does not exist.

Qatar’s North Field expansion is attracting enormous interest from foreign investors, with TotalEnergies tipped to become the first of the Phase-2 partners to be selected later this month. But investors in existing Qatari projects face a rocky ride when contracts on current joint ventures expire, as Exxon and Total discovered when their prized Qatargas-1 contract was not renewed last year. Al-Kaabi revealed that QatarEnergy came close to going it alone on the North Field expansion, too. Qatar, which is generating around 1 million barrels of oil equivalent per day of net output for Exxon, Total and Shell alone, is critical for the majors. However, “if there is no value, there is no partnership, very plain and simple,” al-Kaabi said. Even if joint ventures are maintained after expiry, terms will be tougher. For Exxon, which has stakes in nine of Qatar’s 14 trains, these contract renewals are especially strategic. Qatar knows the value of its LNG will likely drive a hard bargain. “An investment in Qatar is really an important downside-risk revenue maker” for partners, al-Kaabi said.

LNG is only part of a multifront, international investment drive now under way at QatarEnergy. Downstream, petrochemicals is a priority, with al-Kaabi touting QatarEnergy’s planned US project with Chevron Phillips Chemical as “the largest polyethylene plant.” It recently awarded construction contracts for a 1.2 million ton/yr blue ammonia project, also tipped to be the biggest of its kind. But its global upstream drive is most significant. There were doubters when the strategy launched, but QatarEnergy has been vindicated over the past year by major exploration success in Namibia. QatarEnergy, by virtue of sizable stakes in both Total and Shell discoveries, is poised to be the largest reserves holder in a significant new oil province — Total’s Venus discovery is described as the largest deepwater find ever. There have also been offshore gas discoveries in Cyprus and South Africa. And in Brazil, output at QatarEnergy’s offshore Sepia field is set to more than double to 400,000 barrels per day in the next couple of years.

Despite confidence in long-term gas demand, QatarEnergy is taking steps to ensure its place in the energy transition. It is investing heavily in greenhouse gas emission mitigation technology at projects. Over $250 million is being spent on such measures at the LNG expansion alone — principally carbon capture and storage (CCS) and solar power. Some 11 million tons/yr of CCS is planned by 2035. “From an overall value chain, Qatari LNG will be the least carbon footprint LNG you can get,” al-Kaabi said. “We think that our buyers, and our investors that have joined us in [North Field East expansion], see this as the Rolls-Royce of projects.” Transition pressures are feeding into the urgency for developing projects. “I am a believer that you need to monetize what you can because the market conditions change, and there is a competitive advantage to go ahead of others,” al-Kaabi stated.

Russia defied expectations of a collapse in oil production following its invasion of Ukraine. But Moscow will have to redouble its efforts to find new buyers if it’s to keep output from shrinking in the coming months.

After plunging in the immediate aftermath of its offensive in February, Russian production has rebounded over the past three months as domestic refining boomed and Asian customers stepped in to take shipments shunned by Western buyers. Yet a looming European Union ban on most Russian crude, as well as a gathering economic slowdown, will strike a blow to the country’s producers.

“Russian oil companies have been enjoying the beauties of the summer season — soaring domestic demand and the absence of EU sanctions have allowed them to ramp up production,” said Viktor Katona, head of sour-crude analysis at data firm Kpler. “As we look into the immediate future, that is bound to change.”

Russian output of crude and condensate — a lighter type of oil — reached a wartime high of around 10.8 million barrels a day in July. Volumes may fall to about 10.5 million a day when the EU ban kicks in in December, Katona said. Analysts at Rystad Energy AS see some 10.1 million a day by year-end, while the International Energy Agency expects a slump of about 2 million a day by the start of 2023.

Russia’s Energy Ministry didn’t respond to requests for comment on its outlook for future production as the EU restrictions approach.

The embargo, which will apply to imports of seaborne crude and most piped supplies from Dec. 5, is set to remove some 1.3 million barrels a day from the European market, IEA estimates show. A ban on oil-product imports follows on Feb. 5, likely cutting a further 1 million barrels a day, the IEA said last week.

Many traditional buyers are already refusing to take Russian barrels, prompting Moscow to sell to customers in Asia, often at a substantial discount. Russia has this year raised its seaborne crude flows to the region by almost 800,000 barrels a day, according to vessel-tracking data compiled by Bloomberg.

But the country can’t count on Asia to mop up all the spare barrels once the EU ban comes into effect as the region is already saturated with Russian crude, according to analysts at Kpler, Rystad and Moscow-based BCS Global Markets.

“In the short term, Asia is already taking almost all that it can,” said Ron Smith, an analyst at BCS.

A loss of Russian production equal to all its current seaborne exports to Europe is a worst-case scenario and unlikely to materialize, said Sergei Vakulenko, an independent expert with more than 25 years’ experience in the Russian oil industry. He expects that traders globally will be eager to find buyers for the extra Russian volumes, given a dearth of spare production capacity elsewhere.

Vakulenko sees Russian output remaining roughly flat until year-end, a view shared by Kirill Bakhtin, a senior oil and gas analyst at Sinara Bank.

“We expect more or less stable production of Russian liquid hydrocarbons in the amount of 10.8 million barrels per day until February 2023,” thanks to successful efforts to redirect oil from Europe to Asia, Bakhtin said.

In the first couple of weeks this month, Russia’s daily crude oil and condensate output averaged about 10.47 million barrels a day, according to a Kommersant newspaper report Monday. The 3% drop from July is likely driven by seasonality and not by long-term factors such as sanctions, with much of the lower supply coming from a group of smaller producers, including gas giant Gazprom PJSC, according to the Energy Ministry’s CDU-TEK data seen by Bloomberg.

Refinery Demand

Russia’s seaborne exports have recently slid from their spring peaks, but oil producers have been bolstered by growth in domestic refining amid higher seasonal fuel demand at home and abroad.

Yet toward the end of the year, any attempt to process more crude domestically and increase output of lighter products — which may find a market in Europe before the February ban is enforced — would also mean production of heavier fuels that are harder to sell in the colder months.

In spring, Russian producers were able to find buyers for their fuel oil in the Middle East after the US imposed its own ban. But demand in that region may ebb as the weather cools, limiting Russia’s ability to export the heavy product, said Mikhail Turukalov, chief executive officer of Moscow-based Commodities Markets Analytics LLC.

In the colder months, Russia also lacks the logistical capability needed for a major hike in fuel-oil exports, Turukalov said.

“This winter, oil-processing in Russia will hardly be able to grow enough to compensate for the expected oil-export declines,” he said.

— With assistance by James Herron, and Julian Lee

The globe is in the grips of a climate crisis as temperatures soar and rivers run dry, and yet it’s never been a better time to make money by digging up coal.

The energy-market shockwaves from Russia’s invasion of Ukraine mean the world is only getting more dependent on the most-polluting fuel. And as demand expands and prices surge to all-time highs, that means blockbuster profits for the biggest coal producers.

Commodities giant Glencore Plc reported core earnings from its coal unit surged almost 900% to $8.9 billion in the first half — more than Starbucks Corp. or Nike Inc. made in an entire year. No. 1 producer Coal India Ltd.’s profit nearly tripled, also to a record, while the Chinese companies that produce more than half the world’s coal saw first-half earnings more than double to a combined $80 billion.

The massive profits are yielding big pay days for investors. But they will make it even harder for the world to kick the habit of burning coal for fuel, as producers work to squeeze out extra tons and boost investment in new mines. If more coal is mined and burned, that would make the likelihood of keeping global warming to less than 1.5 degrees Celsius even more remote.

It’s a remarkable turnaround for an industry that spent years mired in an existential crisis as the world tries to shift to cleaner fuels to slow global warming. Banks have been pledging to end financing, companies divested mines and power plants, and last November world leaders came close to a deal to eventually end its use.

Ironically, those efforts have helped fuel coal producers’ success, as a lack of investment has constrained supply. And demand is higher than ever as Europe tries to wean itself off Russian imports by importing more seaborne coal and liquefied natural gas, leaving less fuel for other nations to fight over. Prices at Australia’s Newcastle port, the Asian benchmark, surged to a record in July.

The impact on profits for the coal miners has been stunning and investors are now cashing in. Glencore’s bumper earnings allowed the company to increase returns to shareholders by another $4.5 billion this year, with the promise of more to come.

Gautam Adani, Asia’s richest person, capitalized on a rush in India to secure import cargoes amid a squeeze on local supply. Revenue generated by his Adani Enterprises Ltd. jumped more than 200% in the three months to June 30, propelled by higher coal prices.

US producers are also reaping bumper profits, and the biggest miners Arch Resources Inc. and Peabody Energy Corp. say demand is so strong at European power plants that some customers are buying the high-quality fuel typically used to make steel to generate electricity instead.

The wild profits threaten to become a political lightning rod as a handful of coal companies cash in while consumers pay the price. Electricity costs in Europe are at record highs and people in developing nations are suffering daily blackouts because their utilities can’t afford to import fuel. Earlier this month, United Nations Secretary-General Antonio Guterres lashed out at energy companies, saying their profits were immoral and calling for windfall taxes.

Coal’s advocates say the fuel remains the best way to provide cheap and reliable baseload power, especially in developing countries. Despite the huge renewable rollout, burning coal remains the world’s favorite way to make power, accounting for 35% of all electricity.

While western producers cash in on the record prices — with companies such as Glencore committed to running mines to closure over the next 30 years — top coal consumers India and China still have growth on the agenda.

The Chinese government has tasked its industry with boosting production capacity by 300 million tons this year, and the nation’s top state-owned producer said it would boost development investment by more than half on the back of record profits.

Coal India is also likely to pour a large chunk of its earnings back into developing new mines, under government pressure to do more to keep pace with demand from power plants and heavy industry.

China and India worked together at a UN conference in Glasgow last year to water down language in a global climate statement to call for a “phase down” of coal use instead of a “phase out.”

At the time, few would have predicted just how expensive the fuel would become. Just a year ago, the biggest international mining companies —  excluding Glencore — were in a full retreat from coal, deciding the paltry returns were not worth the increasing pressure from investors and climate activists.

When Anglo American Plc spun off its coal business and handed it over to existing shareholders, one short seller, Boatman Capital, said the new business was worth nothing. Instead the stock — known as Thungela Resources Ltd. — skyrocketed, gaining more than 1,000% since its June 2021 listing, with first-half earnings per share up about 20-fold.

Glencore itself snapped up a Colombian mine from former partners Anglo and BHP Group. The nature of the deal, and rising coal prices, meant Glencore essentially got the mine for free by the end of last year. In the first six months of this year, it made $2 billion in profit from that one mine, more than double its entire coal businesses earnings in the same period last year.

The earnings look set to keep rolling in, as analysts and coal executives say the market will remain tight.

“As we stand today, we don’t see this energy crisis going going away for some time,” Glencore Chief Executive Officer Gary Nagle said.

— With assistance by David Stringer, and Will Wade