Category: Uncategorized

China’s “Zero-COVID” Policy Could Crush Its Energy Storage Ambitions

In such uncertain times, there are few economic sectors that are a 100% sure bet for investors – but energy storage certainly seems to be one of them. As the world leans more earnestly toward decarbonization and the United Nations and the Intergovernmental Panel on Climate Change sound a “code red for humanity” as the window of opportunity to avoid the worst impacts of global warming rapidly closes, energy storage has become one of the fastest-growing industries as demand for clean energy heats up.

The global energy storage market is on track to hit one terawatt hour by 2030, a quantity that would mark a more-than 20-fold increase over the already groundbreaking 17 gigawatts/34 gigawatt-hours that were online at the end of 2020. “Overall investment in battery storage increased by almost 40% in 2020, to USD 5.5 billion,” the International Energy Agency (IEA) reported at the end of last year.

“The global storage market is growing at an unprecedented pace. Falling battery costs and surging renewables penetration make energy storage a compelling flexible resource in many power systems,” says Yiyi Zhou, a clean power specialist at Bloomberg BNEF. “Energy storage projects are growing in scale, increasing in dispatch duration, and are increasingly paired with renewables.”

The breakneck increase in storage capacity is largely being driven by China and the United States, which are currently embroiled in a quietly simmering energy storage war. Each of these countries added gigawatt-scale additions of energy storage capacity in 2020. Together, China and the U.S. represent more than half of the global energy storage market projections for 2030.

China is currently winning the race, having more than doubled its energy storage capacity additions in 2020. What’s more, in July of last year, Beijing announced that it is planning to install 10 times more capacity than its 2020 levels by just 2025.

Now, a new plan released this year shows that China aims to achieve this breakneck pace for energy storage addition by butting the cost of electrochemical energy storage systems by 30% by 2025. The 5-year plan released by the National Development and Reform Commission and the National Energy Administration also outlines the complete commercialization of non-hydro energy storage systems by 2030. “The country will seek breakthroughs in long-duration storage technologies such as compressed air, hydrogen, and thermal energy, and aim for self-reliance in key fields,” Bloomberg reports.

“It will conduct pilot programs using various technologies to meet different storage duration requirements, lasting from minutes to months.”

The ramping up of non-hydro energy storage capacity installation will take place in tandem with the expansion of wind and solar capacity development, which is to be built out at a massive scale in China’s desert regions. This will help China achieve its goal of weaning itself off of foreign energy imports and shore up Beijing’s energy security and energy independence.

Long-term energy storage will allow energy produced in China’s sparsely populated deserts to be piped into the country’s massive and energy-hungry urban areas. “The country will also explore storage technologies for power produced by offshore wind farms, so as to reduce transmission capacity needs and improve the utilization rate of the electricity generated,” says Bloomberg.

As straightforward and promising as these plans may be, Beijing’s ambitious plans for clean energy development and increased investment in energy storage are coming at a time when China’s economy is in trouble.

Current Covid lockdowns in the affluent economic hub of Shanghai are costing the country a stunning $4.6 billion USD a month, amounting to about 3% of the nation’s GDP. The country’s “zero-Covid” approach is being derided as a “fiasco” as 62 million Shanghai-area residents (a group larger than the population of Italy) are being locked into their homes and locked out of the economy.

If President Xi Jinping continues to try to outgun the novel coronavirus instead of adapting to mitigate and coexist with Covid, many of China’s most ambitious plans may prove to be out of reach.

OILPRICE by Haley Zaremba, April 4, 2022

Independent ARA Product Stocks Hit Four-Month Low (Week 14 – 2021)

April 8, 2021 — Independently-held inventories of oil products in the Amsterdam-Rotterdam-Antwerp (ARA) trading and storage hub have hit their lowest weekly level since early December.

Total stocks fell over the past week, according to the latest data from consultancy Insights Global. This is the lowest recorded since the week to 4 December. Stringent controls on the movement of people across Europe have reduced regional transport fuel demand, creating arbitrage opportunities for buyers elsewhere.

Inventories of gasoil, fuel oil, gasoline and naphtha all fell on the week, with the heaviest fall recorded on fuel oil stocks. A mix of Aframax and Suezmax tankers carrying fuel oil departed ARA for the Caribbean, the Mediterranean and Saudi Arabia, as well as Egypt’s Port Said for orders. Fuel oil cargoes arrived in the ARA area from Estonia, France, Germany, Poland and the UK.

Gasoline stocks fell, with cargoes departing ARA for Canada, the Mediterranean, Kenya, Puerto Rico, west Africa and the US. Some winter-grade gasoline also departed for Argentina. Barge flows out of the ARA area along the river Rhine were also high, supported by demand from eastern France and upper Rhine destinations. German refiner Miro’s, Karlsruhe refinery was taken offline for maintenance during February, bolstering demand for transport fuel barges from the ARA area in southwest Germany. That demand is likely to ease in the coming weeks as the refinery is now in the process of restarting. Gasoline tankers arrived in ARA from northern Germany, Finland, Russia, Spain, the UK and Ireland over the past week.

Gasoil stocks ticked down, weighed down by a rise in barge outflows to destinations along the river Rhine. Cold weather around Europe over the last week likely stimulated some additional demand for heating oil. Flows of diesel to west Africa rose on the week, and tankers also left for France and the UK. Gasoil cargoes arrived from Russia and Saudi Arabia.

Naphtha inventories fell by on the week, the lowest level recorded since February 2020. The stock draw was the result of a rise in demand from northwest European gasoline blenders working to produce export cargoes, as well as a rise in flows to inland Rhine destinations. Relatively small naphtha cargoes arrived from Finland, Norway and Russia.

Having reached their lowest level since early December the previous week, ARA jet fuel stocks bucked the trend, supported by the arrival of a cargo from Bahrain.

Reporter: Thomas Warner

Saudi Arabia Expected To Increase Oil Prices To Asia

Refiners in Asia expect the world’s largest oil exporter, Saudi Arabia, to raise the official selling prices for its crude oil going to Asia in January due to stronger winter demand, according to a Reuters survey.

Several major refiners in Asia, the top importing crude oil market, have recently increased spot purchases of crude oil to meet stronger demand as consumption is recovering from the lows seen earlier this year and as winter in the northern hemisphere approaches. 

According to the Reuters survey of six refiners in Asia, the buyers of crude expect Saudi Arabia to lift the price of its flagship Arab Light crude grade in January by $0.65 a barrel on average. Forecasts ranged from expected increases of between $0.50 and $0.85 per barrel. 

Saudi Arabia typically announces the official selling prices (OSPs) for its crude oil to all regions for the following month around the fifth of each month. 

The pricing of Saudi crude oil generally sets the trend for the pricing for Asia of other Gulf oil producers such as the United Arab Emirates (UAE), Kuwait, Iraq, and Iran. The pricing of Saudi Aramco affects as much as 12 million barrels per day (bpd) of Middle Eastern crude grades going to Asia.

Setting the prices for December earlier this month, Saudi Arabia reduced its OSP for its flagship Arab Light crude grade to its key market Asia as the Saudis appeared unconvinced that near-term demand had much room to grow. 

The cut in Saudi prices was in line with Asian refiners’ expectations, who had said in a Reuters survey that they expected either a small cut in prices or flat prices for December compared to November because of weakening refining margins and weakening Dubai benchmark prices. 

Over the past month, the Dubai and Oman benchmark prices have strengthened amid stronger demand for spot cargoes, according to data compiled by Reuters.

Is This The World’s Next Major Driver Of Oil Demand?

The energy industry has been plagued by the sharp and deep drop in oil demand for months, and the outlook does not look too good either—with or without vaccines. Traditionally, China has been the one bright spot on the global map as the large consumer that is always thirsty for crude. Now, there appears to be another driver of hope for oil demand: Brazil. The biggest country in South America has been one of the most severely affected by the coronavirus pandemic, but unlike other places that suffered mass infections, this has not harmed fuel consumption.

On the contrary, Bloomberg reports Brazil’s fuel consumption this year has been higher than it was in 2019 and is seen growing further next year driven by strong demand from the agricultural sector, which just finished planting a record amount of corn and soybeans, and from road traffic.

“The rebound in fuel demand was a big surprise,” Paula Jara, an analyst at energy consultancy Wood Mackenzie told Bloomberg in an interview. “When you come to think about it, Petrobras is arguably a unique case worldwide because they were able to raise fuel-making pretty quickly.”

In October, according to Bloomberg, Petrobras processed 1.85 million barrels of oil daily, up by a robust 17 percent on a year earlier, in response to the higher demand. The state major is now even facing a shortage of gasoline in the northeast that it needs to address amid a seasonal demand surge, Argus Media reported in late November.

The increase in demand in the final weeks of the year is coming on the back of eased movement restrictions amid the pandemic and, of course, the holiday season when many will travel to be with their families. Meanwhile, the chances for restrictions to be reimposed are slim, meaning there is little to challenge the surge in demand.

As for traffic patterns, Brazil is demonstrating what many theorized the pandemic would do to people’s driving habits: trips to offices and college campuses have declined as they have elsewhere, but driving for other purposes, such as grocery shopping, has increased. Also, longer journeys out of town have also increased in Brazil, according to the Bloomberg report, driving demand for fuel higher.

In this context—and with demand expected to continue strong—it is no wonder that Petrobras has shown no particular interest in joining the energy transition rush we see in Europe and, to a lesser extent, the United States.

“We are not facing an identity crisis. We are an oil company,” the chief strategy officer of the Brazilian state major told the Financial Times in a recent interview. “The demand will not disappear, and we don’t see other technology able to replace fossil fuels on a large scale [soon],” Rafael Chaves Santos added.

According to BP’s 2019 Energy Outlook, energy demand in Brazil is set for annual growth far exceeding the global total: 2.2 percent versus 1.2 percent in global annual growth. Although the supermajor forecast that the share of renewables will grow strongly in the country’s energy mix, it also noted that oil production will also continue to expand strongly, with Brazil accounting for close to a quarter of the total global increase in production by 2040.

The chief executive of Petrobras recently referred to the renewables rush among other oil companies as a fad, questioning the plausibility of Big Oil’s pledges to become net-zero companies by 2050.

“That’s like a fad, to make promises for 2050. It’s like a magical year,” Roberto Castello Blanco told Bloomberg, adding, “On this side of the Atlantic we have a different view of climate change.”

This does not mean that Petrobras has no emissions-cutting plans. It does, aiming at a 25-percent reduction by 2030. But at the same time, the company is not embarrassed about its core business and is planning an expansion of production while others curb theirs. Based on the demand outlook, the Brazilian major is not wrong.

Norway’s Prime Minister Erna Solberg opens the world’s largest test facility for CO2 transport

Oil & Gas 360 Publishers Note: This is an excellent example from Equinor and Norway on the oil & gas market working to accelerate efforts to capture CO2.

On 30 October Prime Minister Erna Solberg opened the world’s largest CO2 transport test facility at Equinor in Porsgrunn.

The test facility transports CO2 in pipelines, both in gas and liquid form. The objective is to learn more about how CO2 behaves during pipeline transport, which is important knowledge in order to scale up CO2 transport and storage in the future.

The work you do here is an important contribution to the government’s strategy for carbon capture and storage,’ Prime minister Erna Solberg said when she officially opened the test facility.

Equinor has transported CO2 from the Sleipner field in the North Sea since 1996 and from the Snøhvit facility in Hammerfest since 2009, both are projects which have provided Equinor with important information about CO2 transport. In these projects, the CO2 is transported in gas and liquid form, respectively.

Now Equinor and its partners Total, Gassnova and Gassco have modified the facility to make it possible to study transport of CO2 as gas and liquid, simultaneously. This could yield knowledge that is important for determining where a pipeline route could be laid, and which reservoirs could be utilised. Testing and research can improve operation of the CO2 transport and storage project Northern Lights and can also reduce the costs associated with this new industry in the future.

The test facility was built in 1997. It has been used to test the transport of various combinations of oil, gas and water in the same pipeline, so-called multiphase transport. That’s why the facility is called the Multiphase rig. A total of more than one billion Norwegian kroner has been invested in the test facility, including construction and adaptations during the operations period. The facility is the very heart of Equinor’s research centre in Porsgrunn.

The price tag for the modification work was seven million kroner. The test facility has pipes that run in a 200-metre line, and it is the world’s largest test facility for CO2 transport.

‘This shows how infrastructure and competence from the oil and gas industry can be used to accelerate efforts to capture CO2 and store it in reservoir. This is an opportunity to create a new industry in Norway’, says Sophie Hildebrand, Chief Technology Officer in Equinor.

The plan is initially to use the test facility for two different CO2 transport tests, both tests of multiphase transport and testing of measuring instruments. According to the plan, these tests will be under way until the spring of 2021. After that, the test facility will be used to test the transport of both oil, gas and CO2, depending on where the needs are greatest.

Oil & Gas 360º Publisher Note, Editor: Stu Turley, November 30

Top oil trader Vitol says Europe lockdowns mere ‘speed bump’

The world’s largest independent oil trader doubts that new coronavirus lockdowns in Europe will lead to another significant drop in crude prices following last week’s rout.

“This is a speed bump,” Mike Muller, the head of Asia for Vitol Group, said in an interview Sunday with Dubai-based consultant Gulf Intelligence. “We are not going to see a violent reaction in price on Monday.”

Benchmark Brent crude fell 10% in the five days through Friday to $37.46 a barrel, its lowest since May, as daily Covid-19 cases hit a record in the U.S. and nations including France and Germany announced new lockdowns. The U.K. followed suit on Saturday.

While energy demand in Europe is being hit, global oil inventories fell at a rate of around 2 million barrels a day in September and October and that trend will probably continue, according to Muller.

“We are seeing demand destruction unexpectedly from these lockdown measures — hundreds of thousands of barrels-per-day-equivalent for Europe alone,” he said. “But the bigger, overriding picture is still that the world is in a stock-drawing mode.”

Last year, daily oil consumption in Europe totaled 14.9 million barrels, according to data from BP Plc. Demand was 1.5 million barrels a day in France and 2.3 million in Germany.

OPEC+ — an alliance of the Organization of Petroleum Exporting Countries and other producers such as Russia — has helped bolster prices since it agreed to output cuts in April. The group was meant to ease those curbs by 2 million barrels a day in January, but it may be forced into a delay given oil’s renewed weakness.

Bloomberg, Editor: Nadine Daher, November 30